for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up
Banks

Banks urge UK to slow down liquidity rule phase-in

* Early move on liquidity rules disadvantages UK banks

* Bankers want common global interpretation of new regimes.

LONDON, Jan 26 (Reuters) - Britain’s insistence that its banks meet tough new rules ahead of global deadlines will hit the country’s economic recovery, according to a top banking lobby.

The British Bankers’ Association told UK Finance Minister George Osborne on Wednesday a study of six countries showed Britain well ahead of key rivals in introducing globally agreed bank capital and liquidity rules.

This puts lenders in Britain at a disadvantage to peers in Canada, United States, Germany, France and Australia.

“This is most notable when the UK applies additional requirements to the agreed standards, when it implements them earlier than others, and when it does not use the flexibility that standards permit or not in a manner reflected elsewhere,” BBA Chairman Marcus Agius said in a letter to Osborne.

World leaders agreed last November that new bank liquidity rules to absorb short-term shocks won’t become mandatory until 2015 but Britain began introducing such a regime in 2009.

The UK Financial Services Authority said in November it would move in line with the global deadline but the BBA said banks were still having to build up liquidity buffers now.

“The very fact that none of the other countries has put in a liquidity regime and we have to hold some billions of pounds in additional liquidity is the first quantum shift in difference,” BBA Chief Executive Angela Knight told Reuters.

“This is all about reaching a better common intepretation. What you simply can’t argue against is that a lot of this will have an impact as recovery starts to get itself embedded,” Knight said.

The UK finance ministry made no immediate comment and the FSA declined to comment.

The study by law firm Freshfields showed that Britain has a notably more costly and strictly defined regulatory regime than the other five countries studied, Knight said.

UK banks were also holding core Tier 1 capital ratios nearer 10 percent, well above the 7 percent minimum agreed under the global Basel III accord being phased in from 2013, she said.

The BBA represents lenders such as HSBC HSBA.L, Barclays BARC.L, RBS RBS.L and Lloyds LLOY.L.

The FSA, which has been driving the tough stance on capital and liquidity, has been keen to shed its pre-crisis “light touch” reputation as it faces abolition in 2012 when the Bank of England becomes the main prudential banking supervisor.

Other countries like Switzerland have also insisted on applying standards on banks that go beyond new global accords.

for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up