The estimate from the FSA, based on Bank of England figures, comes as the country battles to stave off a nuclear meltdown following its devastating earthquake and tsunami.
Its comments to the Press Association follow fears over a huge claims bill for insurers, which has sent shares in the sector plunging since last Friday’s events.
The FSA said it is trying to establish the total impact Japan’s disaster will have on the UK’s financial sector. The £136bn bank exposure estimate includes loans to Japanese firms in Britain and holdings in Japanese government debt.
David Rule of the FSA’s prudential risk team, said: “The risk we think is manageable on the banking side. On the insurance side it’s early days.”
One estimate earlier this week put the potential claims bill from just the earthquake at as much as £22bn.
Reinsurers are thought to be most at risk, with concerns 2011 profits could be completely wiped out as the Japanese tragedy adds to a series of recent natural disasters, including the New Zealand earthquake and Australian floods.
