Impairments Rising in UK Banking Sector, says Bank of England Deputy Governor
LONDON, Sept 19 – Bank of England Deputy Governor Sam Woods has highlighted a recent increase in impairments among UK banks, as government measures put in place during the pandemic are gradually lifted. Speaking on CNBC television, Woods assured the public that the rise in impairments should not cause alarm, but emphasized that it is being closely monitored.
The economic impact of the pandemic, coupled with a surge in inflation and subsequent interest rate hikes by the Bank of England, have placed significant strain on British households and businesses. As a result, impairments – the reduction in the value of assets held by banks – have seen a notable uptick.
Woods acknowledged that impairments are rising from a very low base, indicating that the banking sector has thus far weathered the storm relatively well. He further assured the public that the Bank of England is keeping a close eye on the situation to ensure that any potential risks are mitigated.
In addition to monitoring impairments, Woods also emphasized the importance of assessing British banks’ exposure to China’s weakening property sector. This comes as concerns grow over the potential spillover effects from China’s property market on the global financial system.
The Bank of England’s comments come at a critical time as the UK economy navigates the path to recovery from the pandemic. While government measures have provided support to individuals and businesses during the crisis, the lifting of these measures brings forth a new set of challenges. As such, the central bank plays a crucial role in monitoring and managing potential risks within the banking sector.
It is important to note that the Bank of England’s focus on impairments and exposure to China’s property sector reflects a wider trend in the global financial landscape. As economies worldwide strive to recover from the pandemic, central banks are closely monitoring various risk factors to ensure stability and safeguard against potential shocks.
As the UK public continues to navigate the post-pandemic landscape, the reassurance provided by Bank of England Deputy Governor Sam Woods serves as a reminder of the ongoing efforts to maintain a balanced and stable financial system. By closely monitoring impairments and potential risks, the central bank aims to ensure that the banking sector remains resilient and capable of supporting the UK’s economic recovery.
More detail via Reuters here… ( Image via Reuters )