UK's Cameron urges euro zone action

Reuters News
Posted: May 24, 2012 1:31 PM
UK's Cameron urges euro zone action

CHICAGO (Reuters) - British Prime Minister David Cameron said on Monday not enough had been done to end the euro zone debt crisis but reassured savers worried by a downgrading of Spanish banks that British banks were well regulated and well capitalized.

"While I would commend what has happened in the euro zone in terms of many of the steps they have taken to make their economies more competitive ... to try and build a firewall, to go through proper exercises of recapitalizing the banks, the truth is we still haven't done enough to decisively resolve the crisis," he told a press conference during a NATO summit.

Last week, Moody's Investors Service downgraded the long-term debt and deposit ratings for 16 Spanish banks and Santander UK Plc, a British subsidiary of Spain's Banco Santander, raising concerns among some British savers about whether they were insulated from the Spanish banking sector's problems.

Cameron said he would meet Spanish Prime Minister Mariano Rajoy in Chicago later on Monday to discuss a range of issues, including the euro zone crisis.

Asked if he could reassure Santander's British customers, Cameron said: "People should know that British banks are well regulated, well capitalized and in terms of the branches of banks in Britain, and all the rest of it, the Financial Services Authority (FSA) has made the position, I think, very, very clear," he said.

Santander UK saw about 200 million pounds ($320 million) of deposits leave the bank on Friday following the Moody's downgrade, although it said that was less than 0.2 percent of deposits and activity had normalized over the weekend.

Santander UK is an autonomous subsidiary of its Spanish group, with its own capital and liquidity and regulated by the FSA.

Cameron denied that he was inflaming the euro zone crisis with his calls for action and his warning that Greek voters in next month's election would be choosing between staying in or leaving the single currency.

"This affects us. Forty percent of Britain's exports go to euro zone countries. What happens in the euro zone matters to the UK and my judgment is that staying silent on the problems would actually be more dangerous than speaking out," he said. "We need these issues to be resolved."

"We have consistently set out the things that we think need to be done, whether that's firewalls, bank recapitalizations, a more active policy on behalf of the ECB (European Central Bank), looking towards euro bonds for the future," he said, referring to common euro zone bonds.

(Reporting by Adrian Croft and Steven Slater in London. Editing by Christopher Wilson)