Bank of England snubs banks to press on with capital rule
By Huw Jones and Christina Fincher
LONDON (Reuters) - Bank of England policymakers said on Tuesday they would press ahead quickly with a new curb on banks' risk exposure and would not be deflected by industry lobbying against the plan.
Paul Tucker, the central bank's deputy governor for financial stability, told British lawmakers that the new rule, which would require UK banks to meet a limit on lending as a proportion of their capital, should be introduced now.
Ratcheting up the pressure on banks, Tucker said lobbying was "completely unacceptable", pointless and regulators would not be deflected "one iota" from their tasks.
Some bankers have complained that demands they build up capital levels run counter to calls from the government and the Bank of England that they lend more in order to boost the country's slow economic recovery.
Andrew Bailey, another BoE deputy governor who is in charge of prudential regulation, also said he wanted the rule in place as soon as possible and that BoE staff were looking at plans submitted by banks for how they could implement it.
"We have made clear that we will go through these with the public, with the institutions during the course of this month. And we will publish. We will make clear what the outcome of that is," Bailey told parliament's Treasury Committee.
There had been "slippage" in the progress of British banks building up their capital buffers, Bailey added.
Britain's Prudential Regulation Authority (PRA), which Bailey heads, said on June 20 that it would set a leverage ratio of 3 percent for UK banks, as required under Basel III international capital rules by January 2018, which would limit the amount they can lend relative to their capital. Continued...