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Launching a public consultation on a new
so-called leverage ratio, the BoE said many financial
institutions may have to comply with a requirement to set aside
funds on top of a proposed minimum of 3 percent of their
capital.
"There may be a case to introduce a supplementary leverage ratio
component to a subset of firms (e.g. ring-fenced banks and/or
systemically important institutions) whose failure would be most
destabilizing for the financial system," the BoE said in a
consultation paper.
Such a supplement would effectively cover the bulk of Britain's
banks.
British lawmakers want a leverage ratio of 4 percent or above,
higher than the proposed global rule for 3 percent, saying
tougher measures are needed to ensure taxpayers are not asked to
bail out banks as they were in the financial crisis.
British banks have been required to meet the 3 percent target by
Jan. 1, 2014, forcing some to raise more capital.
BoE Governor Mark Carney has previously said that 3 percent
might not be high enough.
The U.S. Federal Reserve has insisted on a leverage ratio of 5
percent and above for U.S. banks.
The BoE consultation paper did not propose any specific figures
for what the leverage ratio, including any supplements, should
be.
Global regulators are not due to agree on the level of a
leverage ratio for the industry worldwide until 2015 or later,
given the disagreements between countries.
The discussions have become increasingly charged as many
regulators no longer fully trust the way banks calculate their
main core capital buffers. They are based only risk-weighted
assets, the value of which is open to debate.
The leverage ratio is based on total assets held by a bank and
is therefore seen as less open to interpretation.
The BoE said in its consultation paper that any supplementary
leverage ratio would have to be made up of top-quality capital.
The consultation is due to run until Aug. 14. A final review is
due to be published in November.
(Reporting by Huw Jones, editing by William Schomberg)
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