James Kirkup
February 26, 2009

Mervyn King, the Governor of the Bank of England, has said it is “impossible to say” how much capital will be required to shore up the British banking system.

Mr King said it would take “many months” to establish the scale of toxic assets held by banks, and the scale of problems would change depending on the international economic outlook.

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Giving evidence to the Treasury Select Committee, Mr King said it was vital to “find out what is really on the balance sheets of our major banks”.

“That is not something that is easy to do or can be done quickly,” he told the MPs. “It will require a much longer and more detailed assessment contract by contract.”

He went on: “It will certainly take many months in my view.”

Mr King said the state of the global economy would have a huge impact on the situation of struggling UK financial institutions.

“How much capital banks will need in the end is impossible to tell,” he added.

Mr King dismissed as “wild exaggeration” any suggestion that the country would have to be taken into administration because of the level of liabilities it had taken on from the banks.

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