Banks in the UK could suffer massive losses if current problems in Spain and Italy result in the countries' economies collapsing, new analysis has shown.
The Bank of England's (BoE) latest Systemic Risk Survey revealed that British financiers are heavily exposed to these eurozone member states, which are in grave danger should the Greek financial crisis spread.
Indeed, the BoE indicated that banks have a combined total of $142.5 billion tied up in the nations, with $83.1 billion being held in the private and public arenas of Spain and a further $59.4 billion in their Italian equivalents.
As such, the UK is highly vulnerable should these countries see their monetary difficulties grow further in the coming months.
Marc Ostwald, analyst at Monument Securities, told the Daily Telegraph there is a risk that British banks will suffer from such developments, but added this could give investors some incentive to act.
By Tony Aynsley