Saturday, 1 January 2011
UK banking investments abroad
Where have our clever bankers invested bank assets?
According to the latest Bank of England Financial Stability Report, around 51 percent of UK bank investments were in the domestic economy. A further 15 percent was invested in Europe and the United States, with the remainder being invested in the rest of the world.
The big question on the mind of the Bank of England is how much money did UK banks place in the weak southern European economies. Taken together, investments in Ireland, Spain, Italy, Portugal, Greece amount to just less than five percent of total bank assets. Of that amount, very little was invested in Southern European government paper.
Overall, the Bank of England seem fairly comfortable with UK banking system exposure to Southern European governments. The Financial Stability Report says:
"Against that backdrop, concerns about the ability of some European economies to meet sovereign debt obligations have re-emerged. Direct UK bank exposure to European sovereign debt is relatively low".
So let's all breathe a collective sigh of relief.