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Reveal bank ties, says FSA chief

Monday 12 October 1998 23:02 BST
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HOWARD DAVIES (left), the chairman of the Financial Services Authority, last night called for banks to come clean over the personal involvement of top executives with firms with which they have a banking relationship.

His remarks in a speech in London come after the disclosure that chairman David Komansky and other senior executives at Merrill Lynch, the Wall Street firm leading the $3.75bn Long-Term Capital bail-out, were personal investors in the troubled hedge fund. "Managements need to ensure that the circumstances cannot ever arise in which personal relationships with potential counterparties get in the way of appropriate due diligence," he said.

The FSA was looking at the issue of whether banks should be forced to give more information about their exposures to hedge funds, he said. The authority is also examining whether banks should set aside capital for hedge fund exposures which are collateralised or secured against assets.

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