Big five need £35bn disaster funds
SIR Mervyn King ripped into Britain’s banks yesterday — claiming they need to raise £35billion to get back in the black.
The BANK OF ENGLAND Governor said they were woefully underestimating potential losses from Europe.
And he warned they faced billions more pounds of potential fines and penalties from PPI and Libor. In all, banks may need to raise another £35billion to shore up their balance sheets — and guard against disaster.
The shock comments came two days after Canadian AC/DC fan Mark Carney was picked as the new BoE Governor. He will replace Sir Mervyn next summer.
The Sun reported the appointment with the headline “Head Banger to Head Banker”.
Sir Mervyn — more classical composer Rachmaninoff than classic rockers Rainbow — pulled no punches in telling Britain’s banks to up their game.
He said: “We’re not saying, ‘Tomorrow morning, be out there with the collecting tins in the market.’
“But we need banks to be more clear and more accurate about their position.
“The problem is manageable, but it does warrant immediate action.”
The warning covered Britain’s top five banks — RBS, LLOYDS, BARCLAYS, HSBC and SANTANDER UK.
The BoE said a key problem was that banks were not accounting for the risk of hard-up Brits never repaying mortgages or personal loans.
Analysts warned there was a risk banks may react to the comments by simply calling the loans in.
Article written by Steve Hawkes, Sun City business editor, and sub edited by myself.
Originally published in The Sun on Friday November 30 2012.