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British banks pressure Bank of England to ease capital plans, citing impact on competition

A woman carrying an umbrella with the Union flag near the Bank of England in the City of London, Britain, July 30, 2023. REUTERS/Hollie Adams/File Photo Acquire license rights

LONDON (Reuters) – The Bank of England’s plans to increase bank capital requirements would be “very bad” for the British economy, NatWest’s chief financial officer said, as lenders resist tougher rules globally.

NatWest (NWG.L) Chief Financial Officer Katie Murray said at an investor event in London on Tuesday that the UK’s plan to implement stricter international capital standards, called ‘The end of Basel’ In the United States, they were too harsh.

In the United States, the reaction against the latest rules has been more strident. US banking groups have accused regulators of violating federal laws, while JP Morgan chief executive Jaime Dimon last week he said the proposals were “hugely disappointing”.

Outgoing NatWest chairman Howard Davies also raised concerns, telling a Bank of England event that the reforms would put British banks at a “competitive disadvantage”.

“Other countries are very alert to the implications of Basel… Think of the fuss the Germans will make if SME lending is treated more harshly,” Davies said.

Executives at two rival lenders, who asked not to be named, also told Reuters they were pushing for a watering down of the reforms, which have faced growing banking opposition.

“We have been very strong in our concerns…particularly around SME lending, and also infrastructure and green lending, we think they will be very bad for PLC UK,” NatWest’s Murray told a Bank conference. of America in London.

NatWest had set out its views to both the Bank of England’s Prudential Regulation Authority and the UK Finance Ministry, Murray said.

The comments came as the Bank of England held a industry event discuss ways to deliver on its new objective of boosting the UK’s international competitiveness and growth, subject to alignment with global regulatory standards.

The Bank of England, which declined to comment, is consultant on the latest round of international standards agreed by the Basel Committee on Banking Supervision after the 2007-2009 financial crisis, which established reserves that banks must maintain as protection against losses.

The Bank of England has said banks face rising capital requirements around 6% at the end of the decade applying the remaining rules of the global Basel III standards, which will come into force in January 2025.

Reporting by Iain Withers, additional reporting by Huw Jones, editing by Kirsten Donovan, Sinead Cruise and Alexander Smith

Our standards: The Thomson Reuters Trust Principles.

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