© Reuters. FILE PHOTO: British Chief Secretary to the Treasury John Glen, walks outside Number 10 Downing Street, in London, Britain February 7, 2023. REUTERS/Toby Melville
By David Lawder
WASHINGTON (Reuters) – Britain’s No. 2 Treasury official said on Tuesday that he does not have any immediate concerns about the execution of Switzerland’s Credit Suisse rescue by UBS but will monitor the deal closely, reiterating that UK banks are “very resilient.”
John Glen, chief secretary to the UK Treasury, told Reuters on a stop in Washington that Britain’s banks have not seen deposit outflows in reaction to the failures of U.S. regional lenders Silicon Valley Bank and Signature Bank (OTC:).
Those collapses more than two weeks ago prompted many U.S. depositors to shift billions of dollars from smaller and regional banks to larger U.S. institutions for perceived safety.
“We’ve got a very resilient banking sector. Since the (global financial) crisis 15 years ago, we took some pretty bold measures and those have left us in a pretty good state,” Glen said, adding that he has “great confidence” in UK bank regulation.
Glen declined to comment on the merits of the Swiss government-backed takeover by UBS Group of troubled rival Credits Suisse, saying that was a matter that a sovereign government saw as “necessary.”
“With respect to the Swiss authorities and what they’ve done, I don’t have any immediate concerns, but obviously, we work closely with regulators to look at whether there could be elements that we need to keep monitoring,” he said.
He said this view extends to any impact on the City of London, which has weathered a number of uncertainties in recent years including over Brexit.
Glen said the recent global banking turmoil will not affect the so-called Edinburgh Reforms which he helped craft last year when he was the Treasury’s city minister. The plan eases some capital requirements for smaller banks and includes other reforms to make London more competitive with New York and Amsterdam in financial services.
“The fundamental reliability and security of financial services in the UK is fundamentally a matter for our regulators working with the Treasury,” he said, adding that both are “confident in the context that they find in the UK.”
Pressures from rising interest rates will continue for the banking sector and for the UK housing market, where many homeowners are facing higher mortgage payments due to the prevalence of adjustable rate loans, he said.
“The best thing that we can do as a government is work to get inflation down,” he said, which would ease the upward pressures on interest rates.
