Professor Philip Lane:

One has to interpret what that means. When we say a bank is well capitalised, the bank may make losses which will reduce its equity value and in turn that may also raise funding challenges for the bank. It is not to the degree where we think they would violate the minimum levels of capital that we would require. In other words, it is not something that I think would cause an existential crisis but of course it would be damaging to these banks if they made significant losses on UK lending. It is a concern. We are concerned and that is why we make sure ourselves in respect of the subsidiary in the UK that there is enough capital to be able to absorb losses, even though the investors would lose out on them, without threatening the underlying existence of the institution.