Bank of England forges ahead with lighter bank capital reforms
LONDON, Sept 12 (Reuters) -The Bank of England is pushing ahead with the rollout of revised new rules on how much capital UK banks must set aside to cope with future crises, as it juggles efforts to shock-proof lenders without hurting their global commercial interests.
In a speech published on Thursday, the regulatory arm of the central bank said it would make "substantial amendments" to earlier proposed Basel bank capital reforms in response to consultation feedback and evidence, which had highlighted "too much conservatism" and excessive cost or challenges to implementation.
"In terms of the capital impact, we think there will only be a very small impact on requirements, on average, across UK firms," Phil Evans, director of prudential policy, said in the speech.
"I should make totally clear right upfront that the adjustments we have made to get it right use UK data and are therefore applicable to the UK alone," Evans said, adding the changes were not in any way a comment on "the right approach" to implementing the Basel package for any other jurisdiction.
Taking into account its new proposals on infrastructure, mortgage and small business lending, the Bank of England estimates the impact of the new proposed changes will be less than 1% in aggregate on capital requirements phased in over four years.
"This is smaller than for our consultation proposals, and is clearly very small compared with the roughly 300% increase we needed over the decade from the global financial crisis to COVID. It is a smaller impact than in other major jurisdictions," Evans added.
Reporting By Sinead Cruise; Editing by Amanda Cooper
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