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Bank of England on alert amid possible 'no-deal' Brexit reports

The checks would cover deposits, loans, currency and derivative exposures as well as any changes in the cost of funding and lending rates, the source told Reuters.


Devdiscourse News Desk United Kingdom
Updated: 10-10-2018 20:36 IST
Bank of England on alert amid possible 'no-deal' Brexit reports

Some banks responsible for supplying the lion's share of credit to consumers and businesses in Britain are now preparing for the 'worst-case' scenario, the source said. (Image Credit: Twitter)

The Bank of England has asked lenders in Britain to provide six-hourly checks on their balance sheets in the days after a possible "no-deal" Brexit as it seeks to avert a sudden squeeze in credit supply, a senior industry source said.

The checks would cover deposits, loans, currency and derivative exposures as well as any changes in the cost of funding and lending rates, the source told Reuters.

The central bank has been stepping up contingency planning for a possible disorderly divorce from the European Union. Negotiations between London and Brussels have so far failed to produce a deal with barely six months to go before Brexit day on March 29.

The Bank of England's supervisory arm for the banking sector, the Prudential Regulation Authority (PRA), had no immediate comment.

A no-deal Brexit would erase legal infrastructure relied upon by much of the financial sector, and could derail a shaky UK economy.

The checks will also include telephone calls at regular intervals where senior management can relay in real time the money market impact of Britain's exit from the single market, and the end of decades' worth of shared regulation and mutual commercial interest.

Some banks responsible for supplying the lion's share of credit to consumers and businesses in Britain are now preparing for the 'worst-case' scenario, the source said.

"The working assumption was that there will be something [in terms of a deal], and now... they might simply time out," the source said, describing the lengthy negotiations between Britain and EU lawmakers.

The PRA routinely increases monitoring of lenders around significant events and took similar measures when Scotland voted on its membership of the United Kingdom in 2014 and the Brexit referendum in 2016.

(With inputs from agencies.)

COUNTRY : United Kingdom

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