Is your bank safe?
As rumours and counter rumours regarding the FSA's stress tests continue to circulate the market many people are starting to look towards their own financial investments and whether there financial representative is strong enough to survive. While it is very easy to get carried away with the headlines of stress test failures etc it is worth remembering that the UK government cannot afford to see the UK banking sector collapse and will do anything to save this.
However, we have seen a significant increase in difficulties in the UK building society sector which recently crystallised in the split up of the Dunfermline building society and the ongoing problems reported by the West Bromwich building society. With confidence a major factor in any financial market, more so in the banks and building societies sector, the government and regulators will need to get together and form a battle plan to inject much-needed confidence into the sector. They will need to act very quickly because if confidence does fall away from the UK banking sector then the UK economy as a whole could be in serious trouble.
The bottom line is that the UK government could not and would not let the UK banking sector collapse as this would put everything on the line. There may be some negotiations, some disagreements but ultimately the UK government, regulators and the Bank of England will come good.
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