Andrew Bailey says Bank of England in period of 'heightened tension' after runs on Silicon Valley Bank and Credit Suisse

The Bank of England governor has told MPs the regulator is currently in a period of "very heightened tension and alertness".

However, speaking to the Treasury Committee on Tuesday, Andrew Bailey said the country is not in a period comparable to the financial crash of 2008 - but that vigilance is needed.

He said: "I do not want to give you for a moment the idea that we are not very vigilant because we are, we are in a period of very heightened, frankly, tension and alertness and we will go on being [in that position]."

Stress testing of banks will have to include the fact that deposits can be withdrawn electronically in seconds, deputy governor Sam Woods added.

"A very striking feature of the Silicon Valley Bank run, not so much of the Credit Suisse run by the way, was just the speed with which it took place", he said.

"We know all of us can move money from our accounts in the short time it has taken me to answer this question, as you say, that is a relatively new feature of the market."

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Another relatively new development is the rapid transfer of information on social media, described as a noticeable phenomenon by Mr Woods.

"The other aspect that we've had and we have dealt with, by the way, in various situations in the past, but it's more prominent is the speed with which news can travel, particularly among communities and sometimes sort of through private messaging groups, that is a noticeable phenomenon both here [in the UK] and elsewhere," he said.

A learning point from the collapse of SVB is the speed with which money can travel, he added.

His comments follow the greatest financial turmoil since 2008 as the midsize lender SVB collapsed and its UK arm was subject to a last minute takeover by HSBC. Less than a week later the embattled second largest lender in Switzerland, Credit Suisse was forcibly merged with its rival UBS as its share price plummeted and clients withdrew money.

A difficulty faced by the tech companies and start-ups that banked with SVB was that many had their deposits all with SVB, rather than numerous banks, so when SVB's share price plummeted depositors took fright and withdrew their money.

That problem may exist in the UK as Mr Bailey said holding many bank accounts can be hard for some new companies.

"Another point that I think we will naturally have to look at ... is that something that businesses say to me and actually - particularly start-up businesses, but it's not just start-up businesses - that opening many business accounts to get a sort of diversified range of banks is not easy."

"There is I think a point there around the ease of account opening for businesses."

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