London (MNI) – The threat from deteriorating euro zone sovereign
bond markets and banking sectors remains the ‘most material’ one to UK
financial stability, the Bank of England’s Financial Policy Committee
says.
In the report of its Nov 23 meeting, the Interim FPC says that,
while the exposure of UK banks to the waekest of the zone’s sovereigns
remains “limited”, they have larger exposures to the private sectors of
some of the weaker euro area countries, citing Italy, Spain and
Portugal in particular.
“They also had significant exposures to major European banking
systems, which in turn had large exposures to weaker euro-area
countries”.
It warned that in the event of further deterioration in the euro
area “banks’ asset quality and profits would weaken further. That, in
turn, would also exacerbate uncertainty in fuinding markets and reduce
the availability, or increase the cost of, term refinancing”.
–London newsroom: tel+44 207 862 7492; email: dthomas@marketnews.com
[TOPICS: M$B$$$,M$$BE$]
