The Strategist

UK Central Bank: British banks are ready for hard Brexit

03/06/2019 - 07:27

The Bank of England (Central Bank of Great Britain) believes that the country's banking system is strong enough to withstand shocks in the case of the so-called “hard” Brexit, that is, the UK withdrawal from the European Union without a special agreement.

Public Domain Pictures
Public Domain Pictures
"The capital adequacy ratio of the main banks in the UK is more than three times higher than that before the financial crisis," says the minutes of the February meeting of the Central Bank.

As the regulator assures, leading banks have “large capital reserves that can be used to cover losses”. Thus, the Central Bank concludes, the largest banks "will be resistant to the worst scenario of Brexit".

Recall that at the end of February, Head of the European Commission (EC), Jean-Claude Juncker and British Prime Minister Theresa May discussed the draft agreement on Brexit and agreed on the need to conclude a deal before the EU summit on March 21-22. 

However, after this meeting, Head of the European Council Donald Tusk retained a pessimistic attitude, not excluding that the European Union was waiting for the chaotic exit of Britain or extension of the terms of Brexit.

Back in January, the British parliamentarians rejected a deal proposed by May. Then, Prime Minister resorted to the threat of withdrawing from the bloc without an agreement in order to get concessions from Europe.

And in late February, the country's cabinet began to discuss a decision on the possibility of postponing the country's withdrawal from the European Union (Brexit). The Sun points out that May plans to offer the ministers to formally exclude the option of parting with the EU without a deal (no-deal). Thus, in the case of a new parliamentary vote against the deal under the terms of Brexit, the beginning of the procedure for breaking up with Brussels may be postponed for two months. In the meantime, it is assumed that Brexit will take place on March 29.