LONDON (MNI) – Bank of England Governor Mervyn King has said
sentiment in financial markets has improved a little but warned that the
underlying picture for global growth remains weak.
Speaking at a press conference following the publication of the
Financial Stability Report, King also said that banks should be able to
raise additional capital without derailing the economic recovery by
reducing lending.
The BOE’s Financial Policy Committee said that banks’ capital
raising had slowed and they may well be overstating their capital
strength.
“This problem is manageable, perfectly manageable but it requires
some action now. Just deal with it now, we can do it. There’s no reason
why the actions that need to be taken can’t be done very quickly without
any damage or difficulty to the UK banking system,” King said.
Speaking alongside King, BOE Executive Director for Financial
Stability Andrew Haldane said that there was no hard or fast rule on
whether bank forbearance on loans is a good thing.
“There isn’t any hard or fast rule about when and whether
forbearance is a good or bad thing, we have evidence for both,” he
said.
When asked about the UK property market, Haldane said it is not for
the FPC to form judgements on whether particular asset market is
over-inflated.
“What we have done is to work through the implications for UK banks
of existing stresses or potential future stresses that may have an
impact on residential or commercial property prices,” he said.
Haldane highlighted, however, the FPC’s concerns over banks
lending on commercial property.
He said there was evidence that banks had under-provisioned for
their extensive commercial property lending, and there was extensive
forbearance on the loans.
-London newsroom: 4420 7862 7491 e-mail: wwilkes@marketnews.com
drobinson@marketnews.com
[TOPICS: M$B$$$,M$$BE$]
