Eurozone Crisis

Keith Vaz Excerpts

Thursday 3rd November 2011 Commons Chamber

[Mr Hoban]

My hon. Friend asks some interesting questions. I think that I would rather be here in the House than in Cannes at the moment—[Interruption.] It is important that Parliament should hold Ministers to account on these matters, and I am here to answer its questions. On my hon. Friend’s first question about the strength of the UK banks, there has been a process with the leadership, through the European Banking Authority, which is based here in London, and it concluded that the UK banks did not need to be recapitalised. That is partly a consequence of the measures taken over the past two or three years to increase banks’ holdings of capital and highly liquid assets, which have helped to ensure that they are to an extent insulated from the problems in the euro area.

On my hon. Friend’s wider question about the strength of the European banks, I can tell him that, in calculating the amount of additional capital that banks should hold, the EBA determined that they should hold 9% core tier 1, and that, crucially, their holdings of sovereign debt should be marked to market rather than held at face value. That led to the calculation that banks across Europe need to hold an additional €100 billion of capital.

[Keith Vaz (Leicester East) (Lab)]

May I urge the Minister not to join others who are criticising Greece for its decision to hold a referendum? George Papandreou is a decent and honourable man, and at the end of the day, if he wishes to put this to the Greek people, it is a matter for them. Whatever their decision—I hope that they will vote to accept the bail-out—we should accept it. This is a country that has voted with us on the European Council on many occasions over the last 20 years.

[Mr Hoban]

The right hon. Gentleman makes an important point. This is a matter for the Greek people and the Greek Government to decide. That is a principle to which I am sure everyone in the House would wish to adhere.