Carney reassures markets as banks tumble

Added 24th June 2016

As banking stocks plummeted on Friday morning, Bank of England governor Mark Carney sought to remind the market that they are in good health and reassure investors the BoE stands ready to do whatever is needed.

Carney reassures markets as banks tumble

Mark Carney

Acknowledging that it will take some time for the UK to establish its new relationship with the EU and the rest of the world, Carney said the actions of the BoE to strengthen the UK financial system over the past few years has resulted in UK banks raising over £130bn ($192.6bn, €169.6bn) of capital and more than £600bn in high quality liquid assets.

Alongside this, Carney added that not only is the BoE able to provide substantial liquidity in foreign currency, “the Bank of England stands ready to provide more than £250bn of additional funds through its normal facilities”.

As a result Carney said: “We expect institutions to draw on this funding if and when appropriate, just as we expect them to draw on their own resources as needed in order to provide credit, to support markets and to supply other financial services to the real economy.”

And, while he added that in the coming weeks the Bank “will assess economic conditions and will consider any additional policy responses”, reiterating: “In the future we will not hesitate to take any additional measures required to meet our responsibilities as the United Kingdom moves forward.”

While Carney’s comments had some impact, the UK’s domestically focused banks remain sharply down on the day. Lloyds is currently trading 21% lower, Royal Bank of Scotland is down 17.9%, Barclays, which was more than 21% lower earlier in the day had recovered some ground and was trading 16.7% lower at around 11am.

By contrast, HSBC was trading just over 3.3% higher.

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Geoff Candy

Group digital editor

Geoff Candy joined Portfolio Adviser as News Editor in May 2014. He has been a financial journalist and broadcaster since 2005 and, in that time has worked in both South Africa and the Netherlands, covering everything from high street retailers and construction companies to mining and insurance.

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