Head of FSA: Times of cheap credits have ended
12 March 2008The head of the British Financial Services Authority, FSA, has declared the ending of era of cheap crediting in the British banks, predicting, that creditors will avoid complex financial products for the benefit of old-fashioned banking, based on relations.
Such comment from Hector Sants has appeared before the publication of internal check concerning the nationalization and crisis in Northern Rock.
For the last 3-4 years banks have managed to borrow billions pounds at historically low rates, and as a result to lend out money at a low rate of interest.
At that growth of crediting volumes means, that many companies have burdened themselves with large debts which they try to refinance in dangerous conditions, not realizing the risks.
Mr. Sants has added: «I do not think, that the markets will return to the initial state, and the idea about bouncing back, is completely incorrect.
The new usual state of the market will differ from to what we have used in the past».
According to his forecasts, banks will step aside from promotion of complex financial products, and will longer look at the clients instead of it.
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