The Bank of England warned on Wednesday of the increasing risk that interconnected vulnerabilities in the financial system could turn into actual disruptions, highlighting the renewed conflict in Iran and the rise in debt issuance linked to artificial intelligence.
The Financial Policy Committee of the Bank of England said that the rise in oil and gas prices pushed bond yields to levels not recorded since 2008, according to Reuters.
Despite the resilience of the financial system and stock markets so far, the committee warned of the continued risk of a sharp correction in the markets, and maintained the counter-cyclical capital margin at 2 percent, a margin that changes according to the level of financial risk.
The committee said, in the minutes of its quarterly meeting, that “the possibility of the crystallization of interconnected vulnerabilities in the financial system has increased.”
She added, "The renewed conflict and the accompanying rise in prices of oil, gas, and refined products lead to a negative shock on the supply side that may last for a longer period."
The Financial Policy Committee is chaired by the Governor of the Bank of England, Andrew Bailey, and focuses on risks that threaten financial stability.
In an article published in conjunction with the committee's minutes on the risks of artificial intelligence, Bailey expanded his warnings about the risks associated with advanced AI systems, and stressed the need for "rigorous testing of models, both before and after deployment," in preparation for tightening regulation.
“A more formal regulatory framework may emerge over time, but regulation is not, in my view, the place to start,” Bailey wrote. This must be preceded by the process of understanding and testing models and identifying reliable intervention points.”
The “rapid increase” in AI-related debt issuance has also led to increased exposure of capital markets to developments in the sector, the committee said.
In early September, Morgan Stanley estimated that global AI-related debt issuance totaled about $450 billion, double its level in 2025.
Although shares of artificial intelligence and semiconductor companies declined sharply in July, market performance remained orderly, according to the committee. But she warned that valuations were still high, and a larger shock could lead to sharper repricing.
A series of incidents have raised policymakers' concerns about the possibility of AI systems being able to bypass security measures, including an incident in July when an OpenAI system escaped a controlled test environment and was able to hack into the AI company Hacking Face.
The Bank of England said: “These developments reinforce the committee’s assessment that developments in the field of artificial intelligence may increase cyber and operational risks.”
The Bank of England said that it will present more detailed proposals in early 2027 to amend the rules for bank leverage and the rules regulating the British government bond repurchase market, as traders seek to benefit from interest rate movements, while investors turn their holdings of bonds into temporary liquidity.
The Financial Policy Committee said in July that it would ease the impact of the leverage ratio, which requires lenders to maintain a minimum amount of capital against their total assets.
Consultations on these amendments are scheduled to begin early next year, and the Bank of England said that this “makes it more important to continue developing and implementing measures to enhance the resilience of the British government bond repurchase market.”
Deputy Governor Sarah Breeden said in July that “doing nothing is not an option” when it came to regulating the government bond repurchase market, given the continued risk of a decline in bond trading activity during any financial crisis.
The value of net borrowing in the government bond repurchase market is about 200 billion pounds ($270 billion), according to data from the Bank of England, which said that the financial leverage of hedge funds remained high, but stable in recent months.
Last year, the Bank of England put forward preliminary proposals to tighten the rules, after it was forced to intervene in 2020 and 2022, following the beginning of the “Covid-19” pandemic and after the “mini-budget” proposed by former Prime Minister Liz Truss.
But these proposals faced objections from the financial services sector, and Breeden said that some reforms, such as increasing reliance on central clearing, “may take years, not months.”
Dar Global, listed on the London Stock Exchange, announced that its net profits increased by 149 percent during the first half of 2026, reaching $30.4 million, compared to $12.2 million in the same period last year, driven by the growth in revenues from its real estate projects in the Gulf Cooperation Council countries, Europe, and the United Kingdom.
The company's preliminary unaudited financial results, issued on Wednesday, showed that its revenues rose by 66 percent, to reach $258 million during the six months ending on June 30, 2026, compared to $155.4 million in the same period in 2025.
The total profits of the Saudi subsidiary of Dar Al Arkan increased by 85 percent, reaching $87.7 million, with the gross profit margin improving to 34 percent, compared to 31 percent during the corresponding period last year. EBITDA also grew by 73 percent, to $46.3 million.
The company attributed this growth to proving revenues from a number of its real estate projects, most notably “The Astera” project, which features interior designs by “Aston Martin,” and the “Neptune” project, which features interior designs by “Mawad.”
In terms of the project portfolio, the total development value of Dar Global’s projects nearly doubled on an annual basis, reaching $23 billion, while cumulative contractual sales rose to about $3.9 billion, including 4,380 residential units.
The company's net asset value amounted to $613.3 million, while its total cash balances reached $847.9 million, including $231.6 million in free cash and $616.3 million restricted in escrow accounts, supporting a total available liquidity of about $579.3 million.
Dar Global expanded its business in Saudi Arabia by launching the “Rayana” project in partnership with the Trump Organization, on an area of 2.6 million square meters in Wadi Saffar in Diriyah, which includes luxury palaces and a golf course, with an infrastructure contract valued at 338 million riyals ($90 million). It also revealed the “Trump Plaza Jeddah” and “Paddle Living Residences” projects, with a development value of $383.6 million and $142 million, respectively, within the “Amaya” project.
In terms of financing, in April the company concluded a joint loan agreement worth $250 million to enhance its liquidity, while in August it appointed Gulf Asia Contracting Company to carry out the construction work of the “Trump International Hotel and Tower Dubai” project platform, which consists of 80 floors and a height of about 350 meters, after completing the preliminary work.
For his part, Ziad Al-Shaar, CEO of Dar Global, said that the group recorded a strong financial performance despite the exceptional circumstances witnessed in the region, benefiting from the diversification of its international real estate portfolio and the continued demand in the markets in which it operates.
Al-Shaar explained that cumulative contractual sales rose to about $3.9 billion by the end of June 2026, compared to about $3.2 billion in December 2025, noting that the completion of the joint loan facilities worth $250 million contributed to strengthening the company’s balance sheet and liquidity.
He added that Dar Global will continue to focus on increasing the total development value of its real estate portfolio, whether in its current or new markets, while maintaining financial discipline and raising operational efficiency in implementing projects.
He stressed that the strength of the balance sheet, along with capital management and current project portfolio, supports the company’s ability to achieve long-term value for its partners and stakeholders.
