Risk of financial crisis highest since 2008, City survey says

Julian Harris
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THE RISK of another financial crisis is the highest it has been since the summer of 2008, according to a Bank of England survey released yesterday.

The survey of 68 City market participants found that over half (54 per cent) rate the chance of a “high-impact event” as either high or very high.

Only three per cent said the chance was low or very low.

Sovereign debt crises were the most cited risk along with worries over an impending economic downturn, with 76 per cent of respondents citing these factors.

“The specific concerns cited in the sovereign risk category related mainly to the euro area or countries in the euro area,” the report said.

Meanwhile, a senior member of the Bank’s new Financial Policy Committee said yesterday that heavy regulation of the City would not affect the economy.

Banks could beef up capital by cutting bonuses, by curtailing risk-taking between lenders and raising term debt and equity, Jenkins argued.

“Bank lobbies are winning the battles and losing the war. As for bank leaders, they need to lobby less and lead a lot more,” he said.