Arab Press

بالشعب و للشعب
Saturday, May 31, 2025

Bank of England on heightened alert for further banking turmoil

Bank of England on heightened alert for further banking turmoil

The Bank of England is on "heightened" alert for further turmoil in the banking sector, its governor has said.
However, Andrew Bailey told MPs the recent problems facing lenders had not caused stress in the UK banking system.

Officials have tried to calm investors since Silicon Valley Bank and Signature Bank failed, sparking concerns about the stability of other lenders.

In Europe, worries over the strength of Swiss banking giant Credit Suisse led to a rushed takeover by rival UBS.

Nerves among investors have sparked sharp falls in banking shares around the world.

Mr Bailey told MPs on the Treasury Committee that the Bank of England would "go on being vigilant".

He said we were in a period of "very heightened, frankly, tension and alertness".

The collapse of Silicon Valley Bank (SVB) was the biggest US banking failure since the 2008 financial crisis, and left depositors struggling to get their money out.

The collapse was linked to recent rises in interest rates which had hit the value of SVB's assets.

US regulators had to step in to protect customers, while the lender's UK arm was rescued by HSBC.

The episode has generated heated debate in the US about whether SVB was subject to appropriate supervision and if officials responded properly to its collapse.

At a hearing in Washington on Tuesday, financial regulators called the failure "a textbook case of mismanagement," casting blame on SVB leaders for failing to adjust strategies as interest rates rose last year, despite warnings from officials.

But they faced questions from senators who said the episode had also revealed failures in oversight.

"It looks like regulators knew the problem but nobody dropped the hammer," said Senator Jon Tester, a Democrat from Montana.

UK banking officials admitted to MPs that the speed of the SVB's collapse had taken them by surprise and may mean that banking rules may need updating.

Mr Bailey said it was "the fastest collapse from health to death" since the UK's Barings Bank failed in 1995 after suffering heavy losses resulting from fraudulent investments.

Sam Woods, the chief executive of the Prudential Regulation Authority, noted that SVB UK saw about a third of its deposits - £3bn - withdrawn on one day.

He twice suggested to the MPs that the stress tests applied to UK banks to make sure they can withstand a crisis would need to be looked at, given how new technology meant deposits could be withdrawn electronically in seconds.

However, Mr Bailey told MPs he did not think the UK was in a position similar to the 2008 global financial crisis, when banks stopped lending to each other, plunging the world into a deep recession.

He added that while rising interest rates were "an issue" for US banks, they were less likely to affect UK lenders because they were regulated differently.

In the US the head of the Federal Deposit Insurance Corp, Michael Gruenberg, said the SVB saga had shown the increased risk of bank runs at at a time when "money can flow out of institutions with incredible speed in response to news amplified through social media channels".

He and other regulators in the US expressed support for strengthening banking rules, changes which some politicians such as Elizabeth Warren have championed.

But stricter regulation is opposed by Republicans - reducing the chance of it happening.
Newsletter

Related Articles

Arab Press
0:00
0:00
Close
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
European and Arab Ministers Convene in Madrid to Address Gaza Conflict
Head of Gaza Aid Group Resigns Amid Humanitarian Concerns
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
Iranian Revolutionary Guard Founder Warns Against Trusting Regime in Nuclear Talks
Netanyahu Accuses Starmer of Siding with Hamas
Calls Grow to Resume Syrian Asylum Claims in UK
UAE Offers Free ChatGPT Plus Subscriptions to Citizens
Denmark Increases Retirement Age to 70, Setting a European Precedent
Iranian Director Jafar Panahi Wins Palme d'Or at Cannes
Israeli Airstrike Kills Nine Children of Gaza Doctor
Lebanon Initiates Plan to Disarm Palestinian Factions
Iran and U.S. Make Limited Progress in Nuclear Talks
Trump Administration's Tariff Policies and Dollar Strategy Spark Global Economic Debate
OpenAI Acquires Jony Ive’s Startup for $6.5 Billion to Build a Revolutionary “Third Core Device”
Turkey Weighs Citizens in Public as Erdoğan Launches National Slimming Campaign
UK Suspends Trade Talks with Israel Amid Gaza Offensive
Iran and U.S. Set for Fifth Round of Nuclear Talks Amid Rising Tensions
Russia Expands Military Presence Near Finland Amid Rising Tensions
Indian Scholar Arrested in Crackdown Over Pakistan Conflict Commentary
Israel Eases Gaza Blockade Amid Internal Dispute Over Military Strategy
President Biden’s announcement of advanced prostate cancer sparked public sympathy—but behind closed doors, Democrats are in panic
Mount Lewotobi Laki-Laki Erupts Again, Spewing Ash Cloud over Flores Island
Indian jet shootdown: the all-robot legion behind China’s PL-15E missiles
The Chinese Dragon: The True Winner in the India-Pakistan Clash
Australia's Venomous Creatures Contribute to Life-Saving Antivenom Programme
The Spanish Were Right: Long Working Hours Harm Brain Function
Did Former FBI Director Call for Violence Against Trump? Instagram Post Sparks Uproar
US and UAE Partner to Develop Massive AI Data Center Complex
Apple's $95 Million Siri Settlement: Eligible Users Have Until July 2 to File Claims
US and UAE Reach Preliminary Agreement on Nvidia AI Chip Imports
President Trump and Elon Musk Welcomed by Emir of Qatar Sheikh Tamim with Cybertruck Convoy
Strong Warning Issued: Do Not Use General Chatbots for Medical, Legal, or Educational Guidance
NVIDIA and Saudi Arabia Launch Strategic Partnership to Establish AI Centers
Trump Meets Syrian President Ahmad al-Shara in Historic Encounter
US and Saudi Arabia Sign Landmark Agreements Across Multiple Sectors
Why Saudi Arabia Rolled Out a Purple Carpet for Donald Trump Instead of Red
Elon Musk Joins Trump Meeting in Saudi Arabia
Trump says it would be 'stupid' not to accept gift of Qatari plane
Quantum Computing Threatens Bitcoin Security
Michael Jordan to Serve as Analyst for NBA Games
Senate Democrats Move to Censure Trump Over Qatar Jet Gift
Hamas Releases Last Living US Hostage from Gaza Amid Ongoing Conflict
×