US Financial Crisis: Effects on UK Banks
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Code : ECC0020
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Region : UK |
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United Kingdom – Traditional Hub of International Finance UK went through many radical shifts over the past century, after surviving the two World Wars. Until the 1880s, UK's capital, London, dominated international banking and finance, and grew through its global trade – exporting, shipping and manufacturing almost half of its goods globally. Towards the 19th century, UK adopted a gold standard through its capital city, which in due course grew to be the global hub for trade in money, gold and financial markets. International Finance – Rise of UK Banks and Other Financial Entities In UK, banks played a significant role in nurturing its economy. In 1974, with the increase in money supply and consequent rise in the number of banks, the banking sector was due for consolidation. During this period, BoE played a major role by ensuring that larger banks takeover the smaller ones, with BoE acting as lender of last-resort. |
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US Financial Crisis – Impact on UK Banking Sector Prominent European and UK banks like UBS, Credit Suisse, Deutsche Bank, HSBC, Barclays, Royal Bank of Scotland used their American banking branches to sell loans in the US, as well as in the UK market, catering to a localised investor base.
Strategies Adopted by UK's Policy Makers – A Risky Bet? The UK government led by the Prime Minister, Gordon Brown26 , who served as chancellor of exchequer for ten years, has announced significant comprehensive measures to contain the crisis. In October 2008, the Prime Minister has reshuffled his cabinet by bringing in economic advisors, and set up a National Economic Council. On October 8th, along withAlistair Darling (chancellor of exchequer), Gordon Brown announced a rescue package amounting to almost £400 billion ($ 614.4 billion) and was confident that this initiative would be successfully copied by other policy makers too. The plan is aimed at guaranteeing loans and injecting capital in an effort to resume lending.
