By Jim Brunsden Nov. 23 (Bloomberg) -- U.K. lenders’ risk levels linked to Ireland’s sovereign and bank debt aren’t worrying, Adair Turner, chairman of the U.K Financial Services Authority, told lawmakers today. Turner said it is “broadly speaking not the case” that British banks are heavily exposed in Ireland, which this week requested emergency aid from the European Union and the International Monetary Fund to keep its economy afloat. The biggest Irish risk to U.K. banks stems from the decline in the “Irish economy,” Turner told a Treasury Select Committee. U.K. banks’ holdings of Irish bonds are “not at all worrying” and their exposure to Irish lenders is “not out of line with what you would expect.” British banks have the biggest “exposure” to Ireland, totalling $222 billion at the end of the first quarter, according to the Bank for International Settlements. The exposure of Britain’s banking system to Ireland’s economy is “by no means trivial” and growth in the euro area is “important” to the U.K. economy, said Bank of England Governor Mervyn King on Nov. 16 Royal Bank of Scotland Plc, Britain’s biggest government- controlled bank, had at least 11.9 billion pounds of Irish assets covered by the U.K. taxpayer-backed Asset Protection Scheme at the end of 2009. It also sent 2.71 billion-pounds of additional capital to its Ulster Bank unit up to January this year, according to records in Dublin’s Companies Registration Office. Portugal, Spain Even as EU leaders said Ireland’s bailout will stem contagion in the euro region, investors are turning their attention to Portugal, which hasn’t cut government spending and has barely grown for a decade. A rescue of Portugal may increase pressure on its high budget-deficit neighbor Spain, whose gross domestic product is almost twice the size of Portugal, Greece and Ireland combined. In Spain or Portugal “we do not have the same equivalent of RBS owning a large Irish bank,” Turner said. U.K. banks have “relatively little exposures to sovereign bonds” from Portugal and Spain, he said. “We do have one bank which has a non-trivial involvement in mortgages in Spain. The scale is not on the same scale as the Irish exposure.” --With assistance from Jon Menon in London. Editors: Peter Chapman, Anthony Aarons To contact the reporter for this story: Jim Brunsden in Brussels at jbrunsden@bloomberg.net. To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.

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