Bank says economic climate is 'extraordinarily serious'

Banks should brace themselves to withstand the "extraordinarily serious and threatening" economic situation, the Bank of England governor has said.

The Bank's Financial Policy Committee (FPC) said the eurozone crisis was the biggest threat to the UK's banking system.

It said banks should build up their financial buffers to withstand that.

Bank governor Sir Mervyn King said the Bank itself was making "contingency plans" in case of a eurozone break-up.

Hugh Pym reports.