* BoE's Bailey: insurance sector well-placed for annuity
* Bailey reiterates that BoE vigilant on housing market
By Huw Jones
LONDON, March 31 Banks still need to be
persuaded that well-capitalised lenders are important to
economic growth, Bank of England Deputy Governor Andrew Bailey
said on Monday, but Britain's regulators will keep up the
pressure to boost capital levels.
Banks say lending to businesses is hard when the regulator,
the central bank's Prudential Regulation Authority, keeps
pushing them to beef up their capital at the same time.
Britain had to use taxpayer money to bail out lenders in the
2007-09 financial crisis. Since then, it has required its banks
to hold capital well in excess of new global norms.
Bailey dismissed the industry's criticism but accepted that
regulators have yet to convince everyone about the need for
"My experience tells me that we have had to work harder, and
still have to do so, to embed the idea that a stable financial
system is a necessary condition for economic growth and other
economic welfare benefits, Andrew Bailey told the City Week 2014
"I am firmly of the view that last year's actions on capital
were correct, and I have no doubt at all that the recovery in
bank lending to support economic activity requires a belief and
an expectation that the banking system is and will remain well-
capitalised, and that if we doubt either of these positions,
action will be taken," Bailey said.
The banking system is stronger now, but achieving this has
not been straightforward or uncontroversial, he said.
"And that continues to concern me, because it conveys the
message that acceptance of the benefit of the public good is not
as entrenched as it needs to be - we have work to do to build
the consensus around what constitutes financial stability," said
Bailey, who also heads the PRA.
A stable financial system also allows other reforms, such as
Finance Minister George Osborne's announcement this month that
savers won't be forced to use their pension funds to buy an
annuity in future. That caused shares in top insurers to fall,
amid fears a key source of their profits would dry up.
But Bailey said the industry's financial position is robust
enough to meet and maintain those standards without blocking
another public policy objective, providing for people's welfare
in old age.
He reiterated Friday's statement from the BoE that the
central bank remained vigilant about Britain's housing market
and was ready to take further steps if necessary.
(Reporting by Huw Jones; Editing by Larry King)