The banks of the United Kingdom would need another GBP50 billion in order to comply with extra capital requirements to be placed over and above of the incoming 'Basel III' package of global banking regulations. This was highlighted by consultancy firm KPMG last Tuesday.
According to KPMG, the introduction of a 'leverage ratio' requiring banks to maintain a minimum level of capital against total assets and restrictions on the way banks would calculate the 'risk-weighted' assets. This would determine capital adequacy ratios that could trigger a GBP50 billion demand by the banks.
This was shared by Giles Williams, KPMG Financial Services Partner, "The outlines of 'Basel Four' are already becoming visible, five years before the technical implementation deadline for Basel Three. Care needs to be taken that the banks are not being asked to do too much too soon."
Last June, the Prudential Regulation Authority (PRA) ordered five of the largest banks in the UK, such as Barclays, Lloyds Banking Group and Royal Bank of Scotland in order to raise another of GBP13.4 billion over and above GBP13.7 billion already in the process of being raised.
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