By Huw Jones
LONDON, Jan 19 (Reuters) - Resolving Chinese property
developer Evergrande https://www.reuters.com/markets/stocks/chinese-developer-yuzhou-group-offers-bond-swap-avert-default-2022-01-13
Group's struggle with $300 billion in liabilities has
been fairly protracted but did not threaten financial stability
in Britain, Bank of England Governor Andrew Bailey said on
Wednesday.
China was clearly trying to reduce its reliance on the
property sector for growth and the BoE was closely watching
events at Evergrande, Bailey told parliament's Treasury
Committee.
"We are seeing contagion within China but it seems to be
being kept under control. They are managing it by effectively
preferring onshore to offshore creditors, we do have to note.
But obviously it is a concern to us," Bailey said.
Two banks in Britain, Standard Chartered and HSBC
, have large exposures to east Asia.
BoE Deputy Governor Jon Cunliffe said Britain's banks were
resilient, holding enough capital to withstand another COVID-19
like shock to the economy without requiring government help.
Lawmakers also asked about the end of the use in Britain of
London Interbank Offered Rate (Libor) for loans and other
financial contracts that took place in December. This was one of
the biggest changes in markets in decades and had raised
concerns about financial stability risks.
"I am very pleased with the way it has gone," Bailey said.
While the demise of Libor in Britain has been smooth after
six-and-a-half years of preparations, there was still work to do
in whittling down the number outstanding contracts still
referencing Libor, which is being replaced by the BoE's
overnight Sonia rate.
(Editing by David Milliken)