Abstract
The UK has enjoyed a strong reputation in the field of finance since the end of the 19th century. London is undoubtedly the leading financial centre in Europe, and its banks are among the most powerful in the world. However, the subprime-lending crisis in the US, and the credit crunch that followed, shook world finance to its foundations. Due to a high degree of financial globalization and integration, the troubles in this obscure sub-sector of the American mortgage market had harmful effects on corporations all over the world. The overwhelming majority of banks including renowned, allegedly upstanding institutions such as Citigroup and Merrill Lynch, registered sharp losses, which added confusion to the markets. For some companies, the consequences were even worse: Britain's Northern Rock, for instance, was hit by a "perfect storm", and had to cope with a severe liquidity crisis.
