London, United Kingdom
The head of the Bank of England issued a strongly worded warning to United Kingdom banks to get their financial houses in order to shield themselves from repercussions from the eurozone credit crisis.
Although the UK is not on the euro, the crisis in the 17-member nation eurozone could seriously affect the UK.
Governor Sir Mervyn King said the eurozone financial problems posed the largest threat to UK banks. King said the eurozone crisis presented a "significant and immediate threat to UK financial stability" and could cause a second credit crunch.
He warned UK banks to develop contingency plans in case of a break-up in the eurozone.
King warned the banks to raise more funds, by cutting bonuses to staff and dividend payments to shareholders. However, he said they should not stop lending to households and businesses.
Deputy governor Paul Tucker also warned banks, saying the situation represented an exceptional peril in which conditions could degrade to allow virtually anything to happen.
King, speaking in his role as chair of the interim Financial Policy Committee (FPC), the Governor told commercial banks that they must build up their reserve funds in order to serve as increased insurance against potentially catastrophic developments in the eurozone.
While strongly advising banks to continue lending while cutting staff bonuses and shareholder dividends, the committee suggested issuing new shares to raise capital for reserves if necessary.
- The Double Dilemma Facing Weaker National Economies
- German Chancellor Warns Financial Crisis Solution Will Take Years
- Bank of England Warns U.K. Banks that Eurozone Crisis Poses Biggest Threat
- Major Economies Headed for Slowdown
- Is the National Security Complex Too Big to Fail?
- Troubled Spain Elects New Leadership
- What Happens if Italy's Economy Collapses?
- Europe's Crisis and the Radical Right
- Is Europe Over?
- Europe's Crisis: Beyond Finance
- Uncertainty Rises as Eurozone Crisis Deepens
- Balkans: EU Will Help But Countries Must Reform
- Papademos, New Coalition Government, Tackle Greek Crisis
- Greece: Banker to Head Coalition Government
- Restructuring Euro Debt and Latin Lessons
- France Planning Eurozone Breakaway
- Senior Banker Lucas Papademos Named New Greek Prime Minister
- Italian Debt Reaches Unsustainable Level
- The Perverse Side Effect of the Euro
- Europe's Crisis Is a Global Issue
- Europe, the International System and a Generational Shift
- Europe's Economic Measures Too Little Too Late
- Crisis Gratuitously Self-Inflicted
- Europe's Structural Reforms Are Serious
- Papandreou Survives Vote, Uncertain Coalition Pending
- Greece In Chaos as Papandreou Faces Confidence Vote
- On WWII Anniversary, Greeks Say 'No' Again
- Greek Workers and Pensioners: The Damage Is Done
- EU Candidate Status Rejection Means Less Money for Albania
- Albania-Kosovo Agreement Rekindles Old Suspicions
- EU Urges Kosovo to Plan New Strategy for North
- Turkey Ratifies Railway Agreement to Integrate with Balkan States
- Ankara Intimidating Academics, Restricting Free Speech
- Europe's Woes Make Their Way Across the Mediterranean
- Democracy in Revolution: the Mediterranean Moment
- Riots and Revolutions in the Digital Age
- When Do You Know You Have Crossed a Watershed?
- Global Financial Regulation: Goal Many Espouse But Can It Be Done?
- Forging a Lasting Peace
- Eurozone Needs Exit Rules
- Euro Zone Rescue: Deja Vu All Over Again
- Eurozone Rescue or Recession? Fallout of the October Package
- European Union Leaders Reach Deal on Greece, but Worries Remain
- EU Leaders Announce New Eurozone Rescue Deal
- Can Europe's Divided House Stand?
- Greece's Youth: 'I Have No Hope'
- Battle for the Hearts, Minds and Wallets of Greeks
- France Teetering on Edge of Financial Precipice
- Why Care About the French Presidential Race
- Counterrevolution in Kiev: Hope Fades for Ukraine
- The Dying Bear: Russia's Demographic Disaster
- Bulgaria, Romania and Greece Initiate EU strategy for Balkans
- Irish Elections: From Paramilitary to Presidential Nominee
- Was the IMF Program in Iceland Successful?
- Turkey: Is Quake Aftermath Widening Ankara-Kurdish Rift?
- Turkey's Never-Ending Kurdish Question
- Turkey's Earthquake Strikes at Poorest
Copyright 2011, AHN - All Rights Reserved