Britain’s banks could incur £30bn of losses
Bank of England says banking system requires a contingency plan of £10bn to ward off the threat of bad debt. Banking system needs £10bn contingency plan to ward off the risk of bad debt.
Britain’s banks could incur £30bn of losses on their lending on credit cards, personal loans and for car finance if interest rates and unemployment rise sharply, the Bank of England warned on Monday.
After assessing the fast growth in the consumer credit market, Threadneedle Street is requiring the banking system to hold an extra £10bn of capital as protection against any future losses after finding that lenders are underestimating their exposure to bad debts in an economic downturn.
Publishing its latest assessment of risks to the financial system, the Bank of England also spelt out specific concerns about the impact of Brexit on £20tn of derivatives contracts used by companies and financial firms to manage their risks.
The UK’s withdrawal from the EU also raises questions about whether banks will able to hold consumer data in Britain and poses questions about the ability of insurance companies to make payments to consumers across the union.
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