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		</div><p><a href="http://londonglossy.com/wp-content/uploads/2010/12/bank-warning-over-eurozone-crisis.jpg"><img class="alignnone size-full" title="The Bank of England has warned the UK is only "partially insulated" from the escalating eurozone debt crisis" src="http://londonglossy.com/wp-content/uploads/2010/12/min-bank-warning-over-eurozone-crisis.jpg" alt="The Bank of England has warned the UK is only "partially insulated" from the escalating eurozone debt crisis"/></a></p>
<p>The UK is only &#8220;partially insulated&#8221; from the escalating eurozone debt crisis, the Bank of England has warned.</p>
<p>In its latest Financial Stability Report, the Bank said there was uncertainty surrounding the impact that Europe&#8217;s sovereign debt woes could have on Britain&#8217;s own financial sector.</p>
<p>Banks could strengthen themselves against such risks by holding on to profits and cutting back on dividends and bonuses, the Bank added.</p>
<p>Greece and Ireland have accepted multibillion-pound bailouts from the European Union (EU) and International Monetary Fund (IMF) and there are fears countries such as Portugal and Spain will follow in their footsteps.</p>
<p>The report said: &#8220;Sovereign and banking system concerns have re-emerged in parts of Europe. The IMF and European authorities proposed a substantial package to Ireland. But market concerns spilled over to several other European countries.&#8221;</p>
<p>It went on: &#8220;The UK is only partially insulated given the interconnectedness of European financial systems and the importance of their stability to global markets.&#8221;</p>
<p>The improved resilience of UK banks in the past year and tighter European rules designed to strengthen banks against an economic downturn provide insurance against the risks, the report said.</p>
<p>Basel III regulations require banks to retain higher levels of capital to build up a buffer to protect against potential losses.</p>
<p>In a nod to bankers&#8217; bonuses, the report adds: &#8220;It is the banks&#8217; collective interest to build resilience through the retention of earnings, which would be boosted if banks restrain distribution of profits to equity holders and staff.&#8221;</p>
<p>The latest blow to the eurozone came on Wednesday when key agency Moody&#8217;s placed Spain&#8217;s credit rating on review for a downgrade.</p>
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