August 28, 2013 / 12:56 PM / 4 years ago

UK banks allowed to cut their cash holdings

LONDON, Aug 28 (Reuters) - Britain’s eight top lenders can cut their cash buffers by a collective 90 billion pounds ($140 billion) to help economic growth, the Prudential Regulation Authority said on Wednesday.

The Bank of England based PRA said in a statement it was implementing a policy decided in June by the central bank’s Financial Policy Committee.

Britain’s lenders have been forced in the past to build up liquidity buffers of cash and government bonds far earlier than required under a globally-agreed timetable.

The PRA said banks can scale back their liquidity buffers on condition they have a minimum core capital ratio of 7 percent. The watchdog has already said it expects the lenders to meet this condition by the end of this year.

The change was announced on Wednesday by Mark Carney in his maiden speech as governor of the Bank of England.

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