Bank of England official: loss of income caused by banks was as bad as a world war The economic impact of the global financial crisis was as negative as that of a world war and therefore public anger with banks was a normal and understandable reaction, said Andrew Haldane, head of financial stability at the Bank of England, one of the most influential central banks in the world.
"If we're lucky, the crisis cost will be paid by our children, but I think it is more likely that our grandchildren will pay it," he said, quoted by The Telegraph. Haldane said that banks should be more transparent about risky assets in their portfolios to restore investor confidence in the banking system and restart lending to businesses, thereby creating a 'trampoline' economic recovery.
Britain's central bank recently warned that the biggest banks in the market, namely RBS, Lloyds, Barclays and HSBC, would require about 60 billion pounds (74 billion) of additional capital to cover losses nonperforming loans, fines for past irregularities and risky assets.
According to the Bank’s report concerning Financial Stability, commercial banks should be additional provisions of £ 15 billion to protect against the risk of consumer credit and the European debt still 10.4 billion pounds to cover fines and compensation for customers and 5-35 billion pounds to comply with regulations on risk standards.
As for the excessive income of bankers, central bank official said that Libor rate manipulation scandal was a turning point, and salaries and bonuses are about to fall, although "there is a long way" until they reach acceptable levels.
"In 1980, a regular investment banker was paid about the same as a lawyer or doctor. By 2006, however, the bankers were paid four times as much. This has created a large gap that currently is gradually eroding," said Haldane . Libor rate manipulation:
The Libor scandal is a series of fraudulent actions connected to the Libor (London Interbank Offered...
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