UK banks 'held various opinions on eurozone exposure'

14 December 2012

British banks have held contrasting views on the risks of exposure to countries such as Greece, according to a previously unpublished report.

Reuters said it examined an internal review by the Financial Services Authority from 2011, which was mentioned briefly in Bank of England's semi-annual report last month.

The study discovered that banks were increasingly divided on how to assess the riskiness of lending to governments and banks in Greece, Ireland, Portugal and Spain as the eurozone debt crisis worsened.

Such a finding is significant because it "casts doubt on the way banks have assessed the scale of their risks", the news agency stated.

A spokesperson for the FSA confirmed that the conclusions of the report were discussed with each of the eight banks in question.

"There are valid reasons for some degree of variability," he said, declining to talk about individual cases.

According to a report from the Financial Times, the FSA is planning to implement a new system for foreign banks in the UK that will require them to hold capital and liquidity in separate divisions.

By Gary Cooper

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