Tough regulation needed for risky banks - BoE

The central bank’s Financial Stability Report, released today, says the financial system is most at risk from highly leveraged investors such as hedge funds and insurance companies exposed to credit default swaps (CDS). The Bank of England believes worldwide losses from the banking crisis now amount to around £1.8trn. Banks will need to “address vulnerabilities in their business models” over the medium-term, the report says. It suggests UK banking has become overly-reliant on wholesale funding and has suffered as maturity structures became shorter as problems in the US sub-prime mortgage...