US regulators warn RBS and HSBC over living wills
Regulators in the United States have criticised two UK banks for failing to make adequate provisions in the event of their collapse.
They said HSBC and Royal Bank of Scotland (RBS) must improve their so-called "living wills" or face regulatory action.
Banks create living wills to show how they could be wound up if they suffered a catastrophic shock.
French bank BNP Paribas was also criticised.
The US Federal Reserve and Federal Deposit Insurance Corp (FDIC) said the plans submitted by the three banks felt short of what was required and that "significant progress" was needed.
The FDIC said that the plans of three banks were "not credible", and the US Fed, while taking a softer tone, still said the plans needed considerable work.
The regulators said the banks needed to improve derivative contracts so that they could be terminated quickly in case of bankruptcy.
They added the banks also needed to ensure critical functions could continue to work in a crisis, and that they were able to produce reliable information quickly.
Following the 2010 Dodd Frank Act, banks are required to draw up living wills to show how they could go through ordinary bankruptcy without the help of the taxpayer in order to avoid a repeat of the 2008 financial crisis.
Under the act US regulators have the power to shut down or split up the operations of a US bank, or US subsidiary of a foreign bank.
The US Fed and FDIC have criticised a number of banks for having overly optimistic plans.
Last year, the two regulators censured 11 banks - among them JP Morgan Chase, Deutsche Bank, Barclays Bank and Bank of America - after they submitted living wills.