The Financial Services Authority (FSA) has stepped up scrutiny of UK banks’ exposures to foreign government debt as fears of European sovereign debt contagion sent markets into a renewed frenzy yesterday.

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The City watchdog is in talks with Britain’s banks and their auditors to ensure consistent disclosure of their sovereign holdings according to the standards of the recent European stress tests in their year-end results.

As fears over which banks could be hit by downgrades of sovereign bonds continue to rattle markets, the FSA has also upped its day-to-day monitoring of UK lenders’ exposures.

An FSA spokeswoman said: “We have been holding discussions with the banks and their auditors in relation to their sovereign exposures. What we are looking for is greater consistency and disclosures across firms to give the market clear information.”

Yesterday marked another round of turmoil for Europe’s banks as fears about exposures to debt-stretched economies made investors question their ability to fund in the market.

via British banks ordered to disclose debt exposure amid contagion fears – Business News, Business – The Independent.