LONDON--Britain's biggest banks will be subject to tougher new
capital requirements from 2019 under plans announced on Friday by
the Bank of England.
The central bank's Financial Policy Committee said it proposes
the U.K.'s biggest lenders will be required to meet higher leverage
ratios to ensure they can weather unexpected losses and to shield
taxpayers from bailing out stricken firms in a crisis.
British banks are currently subject to a leverage ratio of 3%.
By 2019, the BOE said it proposes to raise this to up to 4.05% for
the biggest lenders. The precise level of individual banks'
leverage ratios will depend on whether they are classified as
critical to the global financial system and how big their domestic
U.K. operations are, the BOE said.
Big banks' leverage ratios could rise further still, to a
maximum of 4.95%, if the BOE imposes an additional systemwide
capital buffer that it can deploy to rein in excessive lending,
according to the central bank's proposals. British lawmakers will
now scrutinize the BOE's proposals.
Britain's biggest banks include Royal Bank of Scotland Group
PLC, Barclays PLC, Lloyds Banking Group PLC, HSBC PLC and the U.K.
unit of Banco Santander SA. Most banks' leverage ratios will be at
or near 4.05% from next year, according to estimates from Credit
Suisse.
A leverage ratio places an overall limit on the size of a bank's
balance sheet relative to its equity, or capital. Banks are also
subject to capital requirements set globally and nationally that
determine how much capital they need based on the riskiness of
their assets.
Other nations have also set minimum leverage ratios to bolster
the resilience of their financial system. In the U.S., the biggest
banks will from 2018 be subject to a minimum leverage ratio of
5%.
Write to Jason Douglas at jason.douglas@wsj.com and Max
Colchester at max.colchester@wsj.com
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