Banks warned of cyber attack vulnerability

Tim Wallace
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BRITAIN’S biggest lenders need to do more to protect themselves against cyber attacks, the Bank of England’s Financial Policy Committee (FPC) said yesterday.

The banks’ close connections with each other mean they are particularly vulnerable, with complex IT systems and a reliance on centralised market infrastructure exacerbating the risks.

The Bank wants “to ensure that there [is] a concrete plan in place to deliver a high level of protection against cyber attacks for each institution at the core of the financial system, including banks and infrastructure providers, recognising the need to adapt to evolving threats”.

These should be complete by the first quarter of 2014, the minutes of the FPC’s latest meeting said.

Meanwhile the committee, headed by Bank governor Mark Carney, said it does not believe there is a bubble building in the housing market.

Low interest rates and a recovering economy have combined with a lack of new supply to send prices soaring in London and other areas over the past year.

But the Bank argues that housing activity and loan to value ratios remain well below historical averages, indicating that there is not yet a problem.

“The committee judged that there were few signs yet of house prices rising solely in anticipation of future price increases,” the minutes said.

However, the Bank of England said it would remain vigilant to the risks of a bubble in the market.

The FPC has asked staff to study the effects of a sharp hike in interest rates to examine the potential hit to financial stability, as debtors cope with higher costs and banks may face higher default rates, undermining stability within lenders and the financial system.

That work is also expected to cover hedge funds, which the Bank fears may be over-leveraged and so a risk to financial stability.