LONDON British banks, insurers and investment funds see the lowest risk of a big hit to the country's financial system since early 2011, a Bank of England survey showed on Monday.
In a twice-yearly systemic risk survey of financial firms, 20 percent saw a high or very high chance of a "high-impact event" in the next 12 months, well down from 36 percent in the first half of 2012 and the lowest level since the first half of 2011.
Monday's survey showed that worries about a high-impact event over the next one to three years have also eased, though a sizeable 41 percent still believe there is a high or very high chance of this happening.
Sovereign risk posed the greatest danger to Britain's financial system according to 68 percent of respondents, the highest proportion since the survey began in mid-2008.
"Concern focused mainly on Europe," the poll said, adding that respondents were worried about a break-up or collapse of the euro zone.
A new entrant in the Bank's list of key threats was "risks surrounding the low interest rate environment", with a small number of respondents highlighting dangers from a search for yield or risks associated with negative real interest rates.
The poll of 79 firms, which was conducted from September 24 to October 25, is part of the Bank's increased efforts to spot risks earlier, in the wake of the financial crisis, so that action can be taken before markets destabilise.
(Reporting by Olesya Dmitracova; Editing by Hugh Lawson)