Imminent crunch hits bonuses
(5 December 2011 – United Kingdom) Bank of England (BoE) governor Sir Mervyn King has confirmed there are "signs of a credit crunch already in the euro area".
''I don't think that's begun yet, but you can see how it would come through here if funding costs were to continue to be as high as they are, '' King said.
British banks have been ordered to slash bonuses to staff and payments to shareholders as a second credit crunch bears down on the country.
Warning that the cost of borrowing is set to soar and ''given the current exceptionally threatening environment'', the BoE’s financial policy committee instructed lenders to ''limit distributions'' - code for bonuses and dividends.
It also urged them to ''give serious consideration to raising external capital in the coming months'' - a move that would either require the taxpayer to inject more money into the banks or dilute the governments' stakes, making it more difficult to recover the £66 billion (A$101 billion) invested in Royal Bank of Scotland and Lloyds Banking Group.
British banks have been ordered to slash bonuses to staff and payments to shareholders as a second credit crunch bears down on the country.
Warning that the cost of borrowing is set to soar and ''given the current exceptionally threatening environment'', the BoE’s financial policy committee instructed lenders to ''limit distributions'' - code for bonuses and dividends.
It also urged them to ''give serious consideration to raising external capital in the coming months'' - a move that would either require the taxpayer to inject more money into the banks or dilute the governments' stakes, making it more difficult to recover the £66 billion (A$101 billion) invested in Royal Bank of Scotland and Lloyds Banking Group.
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