|
Anil
Kashyap, a newly appointed member of the BoE's Financial Policy
Committee, made the comments in a submission to a British
parliamentary committee.
"I am particularly worried about contagion from stress coming
from the European banks and whether there might be linkages --
perhaps indirect -- between them and the largest UK banks,"
Kashyap wrote.
"The weak condition of some of the large European banks worries
me most.... We do not really fully understand all the potential
channels of contagion that could arise if a major bank on the
continent required recapitalization."
His comments went further than the FPC has done about the
potential impact on Britain of problems at euro zone banks and
could reflect problems at Deutsche Bank <DBKGn.DE>, which faces
a $14 billion fine from the U.S. Department of Justice for
misselling mortgage-backed securities.
Speaking to lawmakers, Kashyap -- a U.S. academic who previously
advised the Federal Reserve and other central banks -- said
concerns among investors over Deutsche Bank were about its
future profitability, not its current capital.
Kashyap said regulators had to enforce rules but "it does seem a
little bit arbitrary as to how big these fines are and why some
firms are being asked to pay this much and others are asked that
much."
He said the recent sharp fall in sterling had not yet created
risks to Britain's financial stability and a further substantial
move would not cause concerns about the health of banks. He also
said he did not see the country's large current account deficit
as a big risk.
Sterling is being hammered on currency markets by fears Britain
is heading for a "hard Brexit" that would stop its banks
offering services across the European Union and threaten the
City of London's role as the world's top financial center.
On Tuesday, financial services minister Simon Kirby said getting
the best deal for the City would be an "absolute priority" in
trade talks with the European Union, including the ability for
banks to hire top talent from across the world.
Nearly 2.2 million people work in financial services in Britain
and the sector contributed 190 billion pounds ($240 billion), or
11.8 percent of output, to the British economy in 2014, making
it the UK's tax generator.
Kashyap is a professor of economics and finance at the
University of Chicago Booth School of Business, and joined the
FPC this month for a three-year term.
(Reporting by David Milliken and Michael Holden; Writing by
William Schomberg; Editing by Catherine Evans)
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
|
