U.K. banks will be need to raise an extra 25 billion pounds ($38 billion), the Bank of England's Financial Policy Committee (FPC) said on Wednesday, detailing the capital shortfall facing the country's financial institutions.
The committee's findings included prescriptions for a number of institutions to further increase capital buffers. Expectations had been for the committee to force banks to raise anything from around 24 to 60 billion pounds in extra capital.
"That actually looks like a fairly sensible number", Bill Blain, senior fixed income broker at Mint Partners said after the announcement. Banks having too much money could be more of a problem than having too little, he said, as it meant that banks were not lending it to companies.
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RBS and Lloyds were widely tipped to be the only two major U.K. banks pushed to continue building capital buffers.
Critics have already hit back at the potential ruling before Wednesday's announcement.
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The whole apparatus of bank capital regulation which has done so much to make the banking system more opaque should be abandoned, according to a new report by the Institute for Economic Affairs.
"Swathes of complex capital regulation have made banking riskier," it said. "Attempts by the British government to require large banks to hold very high levels of capital are misguided."
Aside from this ruling, a flurry of recent banking reports have emerged since the financial crisis.
The Vickers Commission in the U.K., the European Banking Authority and the Liikanen Commission report have all detailed future plans whilst muddying the waters for investors. The Basel III banking regulation is due to be phased in over the next few years which will give banks new rules on capital requirements, leveraging and liquidity.
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Paul Donovan, global economist at UBS told CNBC Wednesday that U.K. banks have been busying themselves with raising more capital but are still not up to the level shown by their U.S. counterparts.
"This [report] is not going to lead to negative bank lending but it's creating a slower pace of bank lending than would be considered normal," he said before the announcement.
-By CNBC.com's Matt Clinch
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