Ovetii States BOE believes Banks could Face Shocks after Credit Collapse
Released on: December 4, 2007, 1:38 am
Press Release Author: Report-24
Press Release Summary: Ovetii recently reported that the Bank of England had said the global financial system is at risk of further instability because of ``ongoing uncertainties\'\' about credit-market losses.
Press Release Body: According to reports by Ovetii sources, the central bank said in its financial stability report that markets are now more susceptible to a potential slump in global stocks, a slide in the dollar or a crash in U.K. commercial property after the U.S. subprime mortgage collapse. Merrill Lynch & Co. yesterday reported the biggest quarterly loss in its 93-year history after $8.4 billion of write-downs.
A senior Ovetii analyst reportedly stated that financial systems in advanced economies are vulnerable to further shocks, either in credit markets or from new sources.
According to sources, Ovetii researchers believe that investors are assessing the fallout from a credit-market rout that led to a surge in borrowing costs and a run on the deposits of U.K. mortgage lender Northern Rock Plc. The recent report said British banks are still hoarding cash to protect their balance sheets, which may keep credit conditions ``tight\'\' into next year and make it harder for borrowers to manage debt.
Ovetii reports also apparently revealed that while the central bank had said ``there have been signs of recovery\'\' in money markets, the interest rate that banks charge each other for three-month loans hasn\'t returned to the level before credit costs surged on Aug. 9. The London interbank offered rate, which was 6.05 percent at the start of August, was 6.28 percent yesterday. It touched a nine-year high of 6.9 percent on Sept. 11.