Jeremy Hunt, the chancellor, was on Monday night urged by the opposition Labor party to tell MPs what he is doing together with the Bank of England to ensure the stability of the British banking system.
Tulip Siddiq, the shadow cities minister, wrote to Hunt saying she had an obligation to the public and the UK’s financial services sector to implement some measures following the problems at Silicon Valley Bank and Credit Suisse.
The Treasury said Hunt has been in regular contact with Andrew Bailey, governor of the Bank of England, who has reassured the chancellor that the British banking system is “safe and sound”.
Rishi Sunak, the prime minister, has also been informed of the development by the Bank of England. Sunak was involved in overseeing the sale of SVB’s UK arm to HSBC last weekend.
Siddiq wrote to Hunt urging him to commit the Treasury and the BoE “to a systemic review of the impact of rising interest rates and wider uncertainty in the global financial system on our financial sector and banking system”.
He urged them to set out how they will work with the BoE, regulators and international partners “to reduce risks in our financial system”.
Siddiq also asked Hunt to say what he was doing to ensure UK start-ups had access to the “patient capital they need to grow and develop”, reducing concentrated exposure to banks like SVB UK.
The Treasury says post-Brexit reforms to EU Solvency II rules will help free up more capital from insurers to help technology companies grow.
Hunt allies added that the chancellor and Bailey had dealt with the issues raised by Siddiq. “Good thing he’s awake,” said one.
The chancellor will face questions about his approach to city regulation on Tuesday when he appears before the House of Lords economic affairs committee.
Hunt has launched a series of regulatory reforms, called the Edinburgh reforms, which aim to relax some EU-era rules.
Meanwhile, the financial services bill, currently in the upper house, would introduce a secondary “competitiveness and growth” objective for regulators, alongside a duty to maintain financial stability.
Hunt is expected to face questions about whether his deregulation agenda is still relevant at a time of uncertainty in financial markets and after several banks collapsed.