Britain steps up EU contingency plan
London, November 28, 2011
Britain is stepping up its contingency plans in case the euro zone breaks up, even though analysts believe that only Greece is currently at risk of departing the 17-nation bloc over the debt crisis.
A senior official at Britain's Financial Services Authority (FSA), said that Britain's banks were drawing up plans for the possible dismantling of the euro zone, but did not elaborate.
Andrew Bailey, deputy head of the FSA's prudential business unit and an executive director of the Bank of England, said banks such as HSBC and Barclays could not afford to ignore the possibility of a breakup.
'We are talking to them about it and they are doing (something about) it,' Bailey said.
'We have talked to them already and will be talking to them again.'
Bailey had earlier told a retail banking conference: 'Good risk management means planning for unlikely but severe scenarios, and this means that we must not ignore the prospect of the disorderly departure of some countries from the euro zone.
'I offer no view on whether it will happen, but it must be within the realm of contingency planning,' he added.
'UK banks remain well capitalised and are required by the FSA to undertake rigorous 'what-if' stress-testing to ensure they hold sufficient financial and liquid resources against severe scenarios of a varying nature,' British Bankers' Association said.
British Prime Minister David Cameron said earlier his government was preparing for every scenario.
'Here in Britain, outside the euro, we must prepare for every eventuality - and that is exactly what we will do,' Cameron told a London conference.
Finance minister George Osborne said 'Britain and the British government prepares for all contingencies.'
Britain is one of the 10 European Union countries that does not have the euro currency but it fears turbulence in the euro zone will heavily affect the kingdom. A total 40 per cent of British trade is with euro zone countries.-TradeArabia News Service