The Bank of England is reportedly considering boosting the amount covered for businesses and forcing banks to better pre-fund the system following the recent collapse of Silicon Valley Bank in March according to the FT.
UK regulators are concerned that the guarantee’s current £85,000 limit covers only two-thirds of deposits; the low level of pre-funding delays customers’ access to their cash by at least one week.
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BoE declined to comment.
Last week, BoE governor Andrew Bailey announced that UK’s Central Bank was considering improving its approach to depositor pay-outs for smaller banks.
“Going further and considering increasing deposit protection limits could have cost implications for the banking sector as a whole”, Bailey said on Wednesday in Washington during meetings with the International Monetary Fund. “As with all things relating to bank resolution, there is no free lunch”, he added.
After the SVB’s collapse, banking officials promised worried consumers they would not lose access to their deposits.
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By GlobalDataDespite that, the collapse of SVB sent jitters through Western markets. The Bank of Ireland’s stock price opened on 14 March at $10.17, later declining to just $9.57 the same morning. Banco BPM’s share price went from $3.91 to $3.85 in a few hours on that day.
However, European banks managed to pull through, with the only significant development being the shotgun marriage of UBS and Credit Suisse as part of the latter’s rescue takeover.
Meanwhile, the British government brokered a deal over the weekend in an attempt to sell SVB UK to HSBC for £1.
