| LONDON, June 9
LONDON, June 9 Fears of a further escalation in
tensions between Russia and Ukraine have surged up British
financial institutions' list of concerns over the past six
months, a Bank of England survey showed on Monday.
Worries about economic downturn and sovereign risk dropped,
but concerns about geopolitical risk rose sharply among British
banks, building societies, insurers and investment funds. Some
57 percent of firms named it as a big concern, up from just 13
percent in October 2013, making it the second-most cited risk.
"Perhaps unsurprisingly given the ongoing tensions in
Ukraine, geopolitical risk was the fastest-growing risk category
compared to six months ago," the BoE said. "All responses citing
a specific region mention the Russian/Ukrainian conflict."
The BoE conducted its survey of 72 risk managers between
April 7 and May 12 - a time when scores of people died in street
battles between supporters and opponents of Russia in separatist
regions of Ukraine.
Concern about a renewed economic downturn remains the top
worry and was named by 61 percent of the risk managers surveyed
by the BoE, down from 67 percent in the last survey in October.
But the overall level of concern that a major shock might
hit Britain's financial system was its lowest since the survey
started in 2008 - possibly reinforcing the BoE's worry that
unusually low recent volatility in financial markets may cause
Just under two thirds of firms think the chance of an
economic shock hitting Britain in the next year is either low or
very low. The proportion seeing little risk for the next one to
three years rose by 12 percentage points to 28 percent.
The top worry remained an economic downturn - either
globally, or concentrated in Britain - and was cited by 61
percent of firms, down from 67 percent in October.
Fears of a house price crash concerned 40 percent, up from
36 percent six months earlier.
BoE Governor Mark Carney has described the rapid rise in
house prices and associated lending as the biggest potential
domestic risk to Britain's financial stability.
* To read the full BoE report, go to here
(Editing by Toby Chopra)