The Finance Owl

Banks – Loans – Mortgages – Money

UK Banks To Hold More Reserves

Posted by theaccountant October - 5 - 2009 - Monday

UK banks are likely to suffer from new proposed rules from the Financial Services Authority (FSA). UK banks, such as Northern Rock and Barclays, look set to have to fulfil obligations to hold increased reserves of cash and government bonds.

As you may expect, many of the banks in the UK are not overly impressed with the potential of increased FSA obligations. The argument by the bankers is often that the UK banks help provide much needed credit to UK businesses, this in turn helps grow the GDP of the UK (often referred to in slang as UK Plc). Many bankers may view the more stringent bank reserve obligations as a stranglehold on their ability to lend much needed bank credit to growing UK businesses.

The counter argument, to the position held by some of the banks, is that which has been highly quoted in the media. The other view is that the banks needed to have tighter rules enforced by the FSA in order to help prevent future repeats of the events of the last twelve months. The intended aim is that by holding more cash and government reserves the banks will be forced to take a more risk adverse approach to their banking business compared with the banking activities of the last few years. The FSA have certainly been expected to act and the media have been crying out for blood, but have they taken the correct course of action.

Are these new FSA proposals potentially the reaction to this media frenzy? Do you think the FSA have taken appropriate action?

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16 Responses to “UK Banks To Hold More Reserves”

  1. scrudriver says:

    Glad to see this getting the coverage it deserves

  2. Jewel Fennern says:

    Thanks for the interesting content!!!

  3. Leatrice Mcclimon says:

    Mortgages, in general, are secured debt. They are secured by the home that you bought with the home finance loan. It truly is not standard to have any further rights in a mortgage loan than foreclosure (it can happen, though). About the only way they can come after you is if they can prove that you were trying to cheat them when you got that mortgage (fraud). If you let the home go to foreclosure, your credit is going to be absolutely trashed for a number of years. You might want to see if you can negotiate a short sale on that property (with that lender). A short sale won’t trash your credit like the foreclosure would.

  4. Spicknall5818 says:

    In the US, many American states have their own personal laws which affect house owners, which makes it very hard for the our lawmakers to come up with a different set of recommendations concerning property foreclosures on householders. The problem is that each state has own legislation which may work in an unwanted manner in terms of foreclosure plans.