British banks press BoE to soften capital plans, citing competition hit

LONDON, Sept 19 (Reuters) – Bank of England plans that would raise bank capital requirements would be “very bad” for Britain’s economy, NatWest’s finance director said, as lenders resist tougher rules globally.

NatWest (NWG.L) Chief Financial Officer Katie Murray told an investor event in London on Tuesday that the UK’s blueprint for rolling out stricter international capital standards, dubbed the ‘Basel Endgame’ in the United States, were too harsh.

In the United States, the backlash against the latest rules has been more strident. U.S. bank groups have accused regulators of violating federal laws, while JP Morgan Chief Executive Jamie Dimon last week said the proposals were “hugely disappointing”.

NatWest’s outgoing chairman Howard Davies also voiced concerns, telling a Bank of England event that the reforms would put British banks at a “competitive disadvantage”.

“Other countries are very alert to the implications of Basel…Think of the fuss the Germans make if SME lending is treated more severely,” Davies said.

Executives at two rival lenders, who declined to be named, also told Reuters they were pressing for a softening of the reforms, which have faced growing bank opposition.

“We’ve been very strong in our concerns…particularly around SME lending, and also infrastructure and green lending, we do think they’ll be very bad for PLC UK,” NatWest’s Murray told a Bank of America conference in London.

NatWest had outlined its views to both the BoE’s Prudential Regulation Authority and the UK finance ministry, Murray said.

The comments came as the BoE held an industry event to discuss ways to meet its new objective of boosting the UK’s international competitiveness and growth, subject to aligning with global regulatory standards.

The BoE, which declined to comment, is consulting on the latest round of international standards agreed by the Basel Committee on Banking Supervision in the aftermath of the 2007-2009 financial crisis, which set reserves banks must keep as a cushion against losses.

The BoE has said that banks face an increase in capital requirements of about 6% by the end of the decade by applying the remaining rules from the Basel III global norms, which are due to take effect in January 2025.

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