Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

UK's big banks may be forced to sell assets to meet regulatory demands

UK's big banks may be forced to sell assets to meet regulatory demands

Some of Britain's biggest banks could be forced to dispose of additional assets in order to meet regulatory pressures, it has been warned.

In the Bank of England's latest Financial Stability Report, high street lenders were warned they could have to set aside £15 billion in extra provisions to cover customers' loans, up to £10 billion to cover fines and up to a further £35 billion to meet regulatory risk demands.

The warning went out to the country's four big lenders - Royal Bank of Scotland, LloydsBarclays and HSBC.

Outlining the concerns of the Financial Policy Committee (FPC), Bank of England governor Mervyn King (pictured) said that while UK banks already reported capital over the minimum level, there were good reasons lenders' margin for safety should be widened.

'Since we met in the summer, sentiment in financial markets has improved a little, supported by policy actions from a number of central banks. But the underlying picture for global growth remains weak, and significant adjustments in indebtedness and competitiveness are still required in the euro area. Inevitably, that has implications for our own banking system and economy.

'Against that background, the FPC's primary concern has been to ensure that UK banks have sufficient capital to underpin the resilience of the banking system, so that they are on a solid footing to support economic growth,' King said.

He added: 'The danger to be avoided is that of inadequately capitalised banks holding back our recovery.'

The governor said the Bank wanted the Financial Service Authority to be sure banks' capital buffers were sufficient enough to absorb losses, and if not, to force this level up in a way that does not hinder lending.

This could be achieved by disposing of 'non-core' assets, King said, adding that the City regulator would now be taking the matter forward with individual banks.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Liontrust ESG head says sustainable investment doesn't mean low return

Liontrust ESG head says sustainable investment doesn't mean low return

Peter Michaelis talks about ethical investment growth and where he sees future opportunites.

Play Are platforms the biggest barrier to wealth manager ETF take-up?

Are platforms the biggest barrier to wealth manager ETF take-up?

Citywire hosted a roundtable discussion to find out how and if wealth managers are using ETFs in their clients' portfolios and the challenges they face trading through different platforms.

Play SVM's Veitch on what's next for banks

SVM's Veitch on what's next for banks

SVM fund manager Neil Veitch is finding value in what he describes as unstable financials and talks through his favourite small caps.

Read More
Your Business: Cover Star Club

Profile: Affinity’s Julia Warrander on the importance of diversity

1 Comment Profile: Affinity’s Julia Warrander on the importance of diversity

'Sometimes there are 10, sometimes 20 people around a table and, more often than not, I’m the only woman,' says the Affinity Wealth co-chief investment officer

Wealth Manager on Twitter