LONDON Oct 11 A Bank of England policymaker
charged with overseeing the banking sector said he was worried
about the risk of British banks being hurt by trouble among
their peers elsewhere in the European Union.
"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," Anil Kashyap, a member of the BoE's Financial Policy
"The weak condition of some of the large European banks
worries me most. As indicated above, we do not really fully
understand all the potential channels of contagion that could
arise if a major bank on the continent required
recapitalisation," he wrote.
Speaking to lawmakers, Kashyap said the recent problems at
Deutsche Bank were linked to concerns about its future
profitability, not its current capital.
He said the recent sharp fall in sterling had not yet
created risks to Britain's financial stability. He also said he
did not see the country's large current account deficit as a big
(Writing by William Schomberg, editing by Andy Bruce)