Breaking News
0

BoE's Kashyap says worried about spillover from EU banking woes

EconomyOct 11, 2016 08:40AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. Commuters walk past the Bank of England in London

LONDON (Reuters) - A Bank of England policymaker charged with overseeing the banking sector said he had big concerns about the risk of British banks being hurt by trouble among their peers elsewhere in the European Union.

Anil Kashyap, a newly appointed member of the BoE's Financial Policy Committee, made the comments in a submission to a British parliamentary committee.

"I am particularly worried about contagion from stress coming from the European banks and whether there might be linkages -- perhaps indirect -- between them and the largest UK banks," Kashyap wrote.

"The weak condition of some of the large European banks worries me most.... We do not really fully understand all the potential channels of contagion that could arise if a major bank on the continent required recapitalization."

His comments went further than the FPC has done about the potential impact on Britain of problems at euro zone banks and could reflect problems at Deutsche Bank (DE:DBKGn), which faces a $14 billion fine from the U.S. Department of Justice for misselling mortgage-backed securities.

Speaking to lawmakers, Kashyap -- a U.S. academic who previously advised the Federal Reserve and other central banks -- said concerns among investors over Deutsche Bank were about its future profitability, not its current capital.

Kashyap said regulators had to enforce rules but "it does seem a little bit arbitrary as to how big these fines are and why some firms are being asked to pay this much and others are asked that much."

He said the recent sharp fall in sterling had not yet created risks to Britain's financial stability and a further substantial move would not cause concerns about the health of banks. He also said he did not see the country's large current account deficit as a big risk.

Sterling is being hammered on currency markets by fears Britain is heading for a "hard Brexit" that would stop its banks offering services across the European Union and threaten the City of London's role as the world's top financial center.

On Tuesday, financial services minister Simon Kirby said getting the best deal for the City would be an "absolute priority" in trade talks with the European Union, including the ability for banks to hire top talent from across the world.

Nearly 2.2 million people work in financial services in Britain and the sector contributed 190 billion pounds ($240 billion), or 11.8 percent of output, to the British economy in 2014, making it the UK's tax generator.

Kashyap is a professor of economics and finance at the University of Chicago Booth School of Business, and joined the FPC this month for a three-year term.

BoE's Kashyap says worried about spillover from EU banking woes
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email