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Confidence plummets in UK financial system

Bank of England (BoE) delivers worrying results from its Systemic Risk Survey.

The Bank of England’s (BoE) Systemic Risk Survey has revealed that confidence in the stability of the UK financial system, as a whole over the next three years, has plummeted to its lowest level since the second quarter in 2009, after only 28% of respondents state that they are “not very confident.”

The comprehensive survey consisted of risk managers at 68 financial institutions — comprising of:

UK banks and building societies (19%)
LCFIs and large foreign banks (24%)
Asset managers (19%)
Hedge funds (21%)
Insurers, including reinsurers and monoline insurers (18%)

Interestingly, in comparison to the top key risks reported most frequently by respondents to have the greatest impact on the UK financial system, only 26% felt that the risk of financial institution failure/distress would have the "greatest impact"

sovereign risk (cited by 76% of respondents)
the risk of an economic downturn (76%)
funding risk (57%)
risks around regulation/taxes (38%)
the risk of financial institution failure/distress (26%).

While it is rather predictable that 'sovereign risk' and an 'economic downturn' would top the bill, funding risk is certainly a major concern for the financial system.

Check out Euromoney's latest in-depth articles on this subject:

Funding freeze pushes banks closer to the edge

Why banks face a painful transition to a smaller future

SMEs: UK Government poised to intervene as bank lending falls short

- Euromoney Skew Blog

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