UK banks are ready for Greek exit, says Bank of England adviser

Monday, May 21, 2012
By Paul Martin

Michael Cohrs says unfolding eurozone crisis means banks must keep bolstering their strength

Jill Treanor
Guardian.co.uk
Sunday 20 May 2012

Britain’s banks are strong enough to withstand any Greek exit from the eurozone but need to keep bolstering their financial strength in the face of the escalating crisis, according to a member of a Bank of England regulatory body.

Michael Cohrs, who is on the committee monitoring financial risks, said the eurozone crisis was unfolding on “an hour by hour” basis and it was difficult to predict where the contagion would end if Greece left the single currency.

In his first interview since joining the Bank’s financial policy committee , Cohrs stressed that UK banks were prepared for the Greek crisis but said the committee was on “alert stations”.

Events unfolding in the eurozone were the reason why the FPC after its quarterly policy meetings had been urging banks to raise more capital.

“British banks are ready for Greece,” Cohrs said. “They have thought about their direct exposures to Greece and they have marked them to appropriate levels, their liquidity is strong and they have enough capital to withstand shocks from Greece. If it goes further it’s not clear, and that is why we have been encouraging them to raise more capital because nobody knows where it will stop or it won’t stop.”

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