September 21, 2007

Banks should show “Sub Prime” exposure

The head of the Financial Services Authority (FSA) Callum McCarthy has said that the Banks should explain their exposure to the US banking problems with the Sub Prime mortgage sector. As this would show the scale of the problems that the banks have and thus prevent any repeats of a Northern Rock type run on the banks.

The problem with UK banks is the fact that they are in excellent shape, both with capital ratios which are above the regulation requirements and the return on equity which is most cases is better than many foreign banks.

So their exposure to the US mortgage problems should not affect the banks stability, so why won’t they come clean and let everyone know to what extent they have been affected?

Source [BBC News]