UK watchdog sets out bank capital standards

LONDON Fri Nov 29, 2013 6:44am EST

LONDON Nov 29 (Reuters) - Britain's banking regulator said on Friday that major lenders and building societies must hold a core capital buffer equivalent to 7 percent of their risk-weighted assets from January 2014.

The Bank of England's Prudential Regulation Authority also said in a statement that the same institutions must also comply with a leverage ratio of 3 percent from the same date. This is a measure of capital in proportion to a bank's total assets on a non-risk weighted basis.

The PRA said it was announcing key decisions on bank capital standards ahead of the introduction of new European Union rules next year.

"These decisions will enhance the stability of the financial sector and strengthen the capital regime in the UK," the PRA said.

"Although the PRA has not finalised all aspects of the rules, it is setting out a number of key decisions in order to give firms clarity on the key policy issues that affect the minimum level of common equitytier 1 (CET1) capital which firms need to maintain," the PRA said.

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