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Government won’t turn its back on failing banks

The government cannot walk away from failing banks in the future without risking wider contagion to other lenders, according to Standard & Poor’s.

In a report published last week, the ratings agency says it continues to factor in the likelihood of government support in a crisis when rating systemically important UK banks, despite government promises that taxpayers would not have to foot the bill for failing banks again.

Giles Edwards, primary credit analyst at S&P, says: “We believe that in practice the government cannot yet walk away from these institutions without risking a failure of one bank spreading across the system, disrupting the supply of credit to households and businesses.”

S&P says that it expects to continue to factor in government support when rating banks for at least the next two years.

While it acknowledges the situation could change after this due to legislation such as that recommended by the Independent Commission on Banking coming into force, it says such measures seem unlikely to prevent a future crisis.

Edwards says: “We believe banking is an industry prone to crisis and that crises will likely happen again.

“Today, we remain unconvinced that a government would always risk the potential adverse economic consequences of allowing a major financial institution to default.”


Less well-off take 22 years to save first home deposit

Lower to middle income households face a 22-year wait to save a deposit on their first home, according to a report out last week. The Resolution Foundation says this compares to just an eight-year wait in 2001 and adds that it would be even longer for those living in London. In its report, The Essential […]

Version 9 on track as TrigoldCrystal sees profits double

TrigoldCrystal saw pre-tax profits of £614,682 for the year ending November 30 2011, almost double its £319,360 profit in 2010, its chief executive has revealed. Its earnings before interest, taxes, depreciation and amortisation, were also up, amounting to £1.35m for the year – up from £1.2m in 2010. Jon Whitmore, chief executive officer of TrigoldCrystal, […]

Broker roadshows on MMR will be handy

Change is something advisers have had to get used to in recent years. From the introduction of regulation in 2001 to the devastation caused by the credit crunch, advisers have had to learn to adapt to survive.


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