Worsening Debt in Europe Is Called Major Threat to British Banks

New York Times
June 24, 2011

The Bank of England governor, Mervyn A. King, said on Friday that the worsening debt crisis in Greece and other European countries was the biggest threat to Britain’s financial system.

Mr. King urged British banks to be especially diligent and clear in disclosing their exposure to European sovereign debt, to avoid a collapse of confidence among investors. He also called on banks to set aside more capital when earnings were strong instead of distributing it to shareholders or employees.

“The most serious and immediate risk to the U.K. financial system stems from the worsening sovereign debt crisis in several euro area countries,” Mr. King said during a briefing on financial stability by the interim Financial Policy Committee, of which he is chairman.

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