Tags: Basel | capital | loss | Lehman

Banks Must Hold More Loss Absorbing Capital by 2015, BOE Says

Friday, 02 Aug 2013 11:27 AM

Banks must hold better quality capital against risks not captured by Basel rules, the U.K.’s top banking regulator proposed, as it prepares to implement European Union standards.

Capital held against risks identified by the supervisor should be mostly made up of high-quality common equity tier 1 capital, which better absorbs losses in a crisis, the U.K. Prudential Regulation Authority, a unit of the Bank of England, said in a statement on its website. The requirement will take effect in 2015.

“Well capitalized and resilient firms are crucial for ensuring financial stability and supporting U.K. growth,” Andrew Bailey, the PRA’s chief executive officer, said in an e- mailed statement. “The PRA has already acted to increase both the amount and quality of capital held by firms, reflecting our determination to improve the stability of U.K. firms after the crisis.”

The EU measures are intended to apply standards, known as Basel III, drawn up by global regulators to prevent a repeat of the crisis that followed the collapse of Lehman Brothers Holdings Inc. The PRA said it would seek views on its plans for applying the EU rules, before publishing final guidance in December.

The PRA proposals cover additional bank-specific requirements to guard against risks posed by a particular bank’s business model. The so-called Pillar 2 requirements must be met by at least 56 percent common equity tier 1 capital, the central bank said, and the regulator may further toughen the standards in 2016.

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Banks must hold better quality capital against risks not captured by Basel rules, the U.K.'s top banking regulator proposed, as it prepares to implement European Union standards.
Basel,capital,loss,Lehman
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2013-27-02
Friday, 02 Aug 2013 11:27 AM
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