Britain risks another crisis: bank chief
Britain risks another financial crisis unless banking reforms are pushed through, the Bank of England governor said in an interview on Saturday.
Mervyn King told The Daily Telegraph newspaper that "imbalances" remain in the banking system and are "beginning to grow again".
The boss of Britain's central bank also said high street banks were routinely exploiting millions of customers and urged them to stop trying to simply "maximise profits next week".
King's intervention comes as a government commission considers whether financial institutions should be forced to separate their investment and retail banking arms.
"We allowed a (banking) system to build up which contained the seeds of its own destruction," King said.
"We've not yet solved the 'too big to fail' or, as I prefer to call it, the 'too important to fail' problem. The concept of being too important to fail should have no place in a market economy."
Asked whether another financial crisis might occur, King said: "Yes. The problem is still there. The search for yield goes on. Imbalances are beginning to grow again."
The BoE governor said that over the past 20 years, too many people in financial services had thought "if it's possible to make money out of gullible or unsuspecting customers that's perfectly acceptable".
The government announced last month it had struck a deal with the major banks on bonus pay and overall lending, as it seeks to curb executive excess and strengthen a delicate economic recovery.
Finance minister George Osborne said total bonuses paid to British-based staff of the four biggest banks will be lower than last year as part of the deal, brokered after weeks of talks.
The BoE kept its key interest rate at a record low 0.50 percent in February -- where it has stood since March 2009 -- after a 6-3 vote as Britain struggles with an uncertain economic recovery and soaring inflation.
Pressed on the chances of an imminent interest rate rise -- potentially as early as next week -- King said there was a "perfectly reasonable case for doing it now".
But he added that increasing rates too soon would be a "futile gesture".
While rising costs have increased pressure for higher interest rates, the BoE is also wary about Britain's fragile recovery from a recession that ended in the final quarter of 2009.
© 2011 AFP