UK banks massively exposed to Spain and Ireland, warns BoE | News | Fund Strategy
UK banks massively exposed to Spain and Ireland, warns BoE News Fund Strategy: "British banks are massively exposed to troubled markets Spain and Ireland by comparison with the core capital they hold as a buffer against losses, the Bank of England (BoE) has warned in its Financial Stability Report.
Although British banks’ total holdings of foreign debt are relatively small compared with other countries, claims on Ireland and Spain in particular are large.
Altogether, the Bank of England says Spanish and Irish positions represent about 75% of major British banks’ core capital, or the buffer they are obliged to hold to guard against losses. (article continues below)
Given its sophistication and international focus, the British banking system as a whole is materially exposed to risks from the international financial system.
Market concerns over sovereign risk in some European economies in particular have “re-intensified sharply” in recent weeks, the BoE says in its latest Financial Stability Report.
“The interconnectedness of the financial system provides a potential amplification mechanism for these credit risks,” the report says. “Some European banking systems have significant exposures to those euro area countries where sovereign risks have intensified.”"
Although British banks’ total holdings of foreign debt are relatively small compared with other countries, claims on Ireland and Spain in particular are large.
Altogether, the Bank of England says Spanish and Irish positions represent about 75% of major British banks’ core capital, or the buffer they are obliged to hold to guard against losses. (article continues below)
Given its sophistication and international focus, the British banking system as a whole is materially exposed to risks from the international financial system.
Market concerns over sovereign risk in some European economies in particular have “re-intensified sharply” in recent weeks, the BoE says in its latest Financial Stability Report.
“The interconnectedness of the financial system provides a potential amplification mechanism for these credit risks,” the report says. “Some European banking systems have significant exposures to those euro area countries where sovereign risks have intensified.”"
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