LONDON: Britain’s banks could deal with a hard Brexit next March if need be, Bank of England Governor Mark Carney said on Wednesday, rejecting European Union warnings that lenders are inadequately prepared.
The BoE’s Financial Policy Committee (FPC) said banks in Britain are holding enough capital and will not need any more to face any turbulence in markets if Britain leaves the EU next March without a deal.
On Monday, the European Union’s banking watchdog, the European Banking Authority (EBA) said banks had failed to make enough progress in their Brexit preparations and should not expect help from “miracle” public intervention.
“With respect, the EBA’s comments earlier this week were incomplete” Carney said in a news conference.
“They did not acknowledge the temporary permissions regime ... which has been very clearly signaled by the UK government.” Carney said British authorities’ preparation of banks for Brexit had been “rock solid” and that the BoE continued to judge that the UK banking system could support the real economy through a disorderly Brexit.
The FPC said capital levels at banks were now high enough that it would leave unchanged their so-called counter cyclical capital buffer or CCYB at 1 percent, binding from the end of November.
The committee had said in March it would review this month whether the buffer should be raised due to other risks that build up over the course of a credit cycle.
These include mortgages granted at high loan-to-income ratios that bump up against the BoE’s ceiling and unsecured consumer lending.
This buffer aims to ensure that banks build up capital to guard against risks as the credit cycle picks up, which they can then draw on during a downturn.
It applies on top of other internationally-required buffers.
The FPC said on Wednesday that consumer credit continues to expand rapidly, but measures already taken to stop overheating were already having an impact, with banks reporting a significant tightening of unsecured credit.
The FPC said Britain has made good progress in ensuring that outstanding derivatives contracts do not pose a risk to the British economy if there is no Brexit transition deal in place by next March.
The FPC also said it will launch in 2019 its first pilot stress test to check on the ability of a select number of lenders to withstand a cyberattack.
Risks from the global economy remained material and have increased, the BoE said, noting that trade tensions have intensified.
Bank of England says UK banks can manage hard Brexit
Bank of England says UK banks can manage hard Brexit
Closing Bell: Saudi main index rises to close at 11,251
RIYADH: Saudi Arabia’s Tadawul All Share Index rose on Thursday, gaining 84.27 points, or 0.75 percent, to close at 11,251.81.
The total trading turnover of the benchmark index was SR5.38 billion ($1.43 billion), as 188 of the stocks advanced and 67 retreated.
Similarly, the Kingdom’s parallel market Nomu gained 157.22 points, or 0.67 percent, to close at 23,643.74. This comes as 44 of the stocks advanced while 32 retreated.
The MSCI Tadawul Index gained 10.88 points, or 0.72 percent, to close at 1,517.43.
The best-performing stock of the day was Saudi Kayan Petrochemical Co., whose share price surged 9.96 percent to SR5.30.
Other top performers included Ataa Educational Co., whose share price rose 9.94 percent to SR57.50, as well as Rabigh Refining and Petrochemical Co., whose share price surged 5.74 percent to SR7.55.
Saudia Dairy and Foodstuff Co. recorded the most significant drop, falling 5.93 percent to SR220.50.
Abdullah Saad Mohammed Abo Moati for Bookstores Co. also saw its stock prices fall 2.77 percent to SR43.56.
Zahrat Al Waha for Trading Co. also saw its stock prices decline 2.30 percent to SR2.55.
On the announcement front, Multi Business Group Co. reported its annual financial results for the year ended Dec. 31. According to a Tadawul statement, the firm recorded a net profit of SR352,172 during the year, down 98 percent from the previous year.
The company attributed the decline primarily to a 2 percent drop in building contracting revenues and a 73 percent decrease in gross profit.
Multi Business Group Co. ended the session at SR9.90, down 1 percent.
Hamad Mohammed Bin Saedan Real Estate Co. announced the signing of a memorandum of understanding with Saudi Awwal Bank to enhance collaboration in financing solutions, advance real estate development projects, and expand access to customer financing programs.
Hamad Mohammed Bin Saedan Real Estate Co. ended the session at SR6.67, up 1.21 percent.
