Wednesday, December 19, 2007
BANK UNDER ATTACK FOR BUNGLING CREDIT CRISIS
British Bankers’ Association chief executive Angela Knight said London’s reputation as a financial centre had been severely damaged by the Bank’s failure to manage the money market freeze.
She said US and European central banks had stood behind their industry by pumping billions into the system. “London does rather look like its dropped the ball,” she said.
“When push comes to shove, other authorities managed the problem and London didn’t.”
Her comments came as the Bank made late amends by injecting £11billion into the money markets. Sources said demand for the £10billion the Bank offered for three months was strong, with the allocation being oversubscribed.
Demand was even greater for £1.35billion in loans covering six, nine and 12 months.
The moves came as the Bank’s governor, Mervyn King, warned the credit crisis was likely to worsen. He said commercial banks had plenty of cash but were unwilling to lend because they did not trust their rivals which might still be sitting on massive losses relating to the global credit crisis.
The situation was unlikely to ease until the first quarter of next year at the earliest, when the banks published their annual results.