Intel surge more than 8% after chipmaker’s profits top expectations
Investing.com -- Bank of England Governor Andrew Bailey expressed concern that the recent bankruptcies of U.S. car parts maker First Brands and auto dealership Tricolor could signal broader systemic risks for the financial system.
Speaking to the Financial Services Regulation Committee of Britain’s upper house of parliament on Tuesday, Bailey questioned whether these failures were isolated incidents or potential warning signs of deeper problems.
"Are these cases idiosyncratic or are they what are called ’the canary in the coal mine’? In other words are they telling us something more fundamental.... I think that is still a very open question," Bailey told the committee.
The House of Lords committee is currently examining the growth of "private markets" - financing provided to large businesses outside traditional bank lending or public securities issuance - which has expanded significantly since 2008.
The bankruptcies of First Brands and Tricolor, both heavily reliant on private finance, have already impacted the U.S. banking sector, with shares of some American banks declining in recent weeks due to their exposure to these failures.
Bailey also raised concerns about potential conflicts of interest in the private finance sector, specifically regarding private finance companies purchasing life insurers that subsequently acquire assets owned by the same private finance companies.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.