Market Overview

U.K. Commission Calls for Bank Capital Increases


The United Kingdom's Independent Commission on Banking recommended Monday that the nation's banks increase Tier 1 capital levels to about 10 percent. The proposal was among others listed in a report on ways to increase competition and safety in the British banking sector.

“Rather than pursuing more radical policies towards capital or structure, the approach outlined is a combination of more moderate measures,” the report said. “They nevertheless entail costs to banks, some of which fall on the wider economy.”

According to a Bloomberg report, "John Vickers, 52, chairman of the commission and former Bank of England chief economist, was asked by the government last year to make recommendations to ensure greater competition and the safety of British banking in the event of another financial crisis. Today's publication opens the way to five months of lobbying before the final report is handed to Chancellor of the Exchequer George Osborne and Business Secretary Vince Cable in September."

Other proposals include plans for orderly dissolution of financial institutions and so-called ring-fence consumer units.

“A retail ring-fence can preserve the possibility that the wholesale/investment banking operations of a universal bank can save the retail banking operations while curtailing the possibility that they can sink them,” the report said.

London's FTSE Index is up slightly Monday, to 6,061.

Posted-In: Bank Of England Bloomberg United Kingdom's Independent Commission on BankingNews Global Economics Intraday Update


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