British banks have criticised the UK Financial Services
Authority’s (FSA) handling of liquidity swaps
between banks and insurers.
Around half a dozen deals have been held up while the FSA
considers liquidity swaps and consults with the market, while
Phoenix and Lloyds have each had transactions blocked in the
The British Banking Authority (BBA) and Association for
Financial Markets in Europe (Afme) have issued a consultation
response, available to view here.
The response argues that the FSA’s fears over
increased interconnectedness are perhaps over-cautious.
"Insurance companies may already have large exposures in the
form of unsecured debt. Liquidity swaps are likely to raise