PT Solid Gold Berjangka | BOE’s Bailey Says Capital Rules Not to Blame for Low Bank Values

01:37 13 February in Fiscal & Monetary, PT SGB, SOLID GOLD BERJANGKA | SOLID GROUP

BOE Bank Of England Andrew Bailey Solid Gold Berjangka SG Berjangka Solid Group PT SGB

Solid Gold Berjangka | The statement from Bank of England Governor Andrew Bailey highlights several key points regarding the UK banking sector and the broader economy:

  1. Regulatory Reforms: Bailey asserts that regulatory reforms since the 2008 financial crisis are not solely responsible for the sharp discount in UK commercial bank valuations. He believes that while reforms have been successful in strengthening the financial system, further measures are necessary to protect banks from potential runs, such as the one experienced by Silicon Valley Bank UK in the past year.
  2. Economic Outlook: Despite concerns about the UK potentially entering a recession, Bailey expresses confidence that any downturn will be shallow. He cites recent indicators suggesting an upturn in the economy, although official figures may indicate contractions in certain quarters.
  3. Financial Stability: Bailey emphasizes the importance of ensuring financial stability by requiring UK lenders to hold significant liquid assets. He notes that while major UK banks currently hold substantial reserves at the Bank of England, the amount will remain elevated compared to pre-2008 levels to safeguard against future financial turbulence.
  4. Market Valuations: The fact that Britain’s banks are trading below their book value and have lower stock market valuations compared to their counterparts in the US and elsewhere is acknowledged by Bailey. However, he refutes the common explanations attributing this disparity solely to higher regulatory capital requirements, arguing that such requirements actually benefit the stability of the financial system.

In summary, Bailey’s remarks underscore the ongoing efforts to fortify the UK banking sector against potential risks while also expressing optimism about the broader economic outlook despite challenges.