UK Banks Told To Plan For Eurozone Split

Britain's biggest banks have been urged by the City regulator to prepare for a break-up of the eurozone.

The head of the Financial Services Authority (FSA), Hector Sants, has told financial institutions to accelerate plans for a separation of the single currency area, Sky's City editor Mark Kleinman has learned .

Senior excutives from Barclays, HSBC, Lloyds Banking Group, RBS, Santander UK and Standard Chartered were given the warning at a private meeting with the FSA boss.

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Although the meeting was not specifically set to issue the warning, Mr Sants said the banks should run a wide range of stress tests as part of their contingency planning.

However, he stopped short of prescribing specific instructions or scenarios.

People close to the FSA told Kleinman that Sants' warning was "the kind of contingency planning expected in a situation like this".

The impact on different banks of a eurozone break-up would vary, depending on their exposures to sovereign debt of member countries.

Where as Barclays holds billions of pounds worth of European government bonds, Santander UK and Standard Chartered have very little direct exposure.

:: Meanwhile, six global central banks, including the Bank of England, have taken action in a coordinated bid to low borrowing costs and boost the world economy.