UK banks need to plug £27 billion capital shortfall.
By Daniel Hunter 20th June 2013. Find Article Here:-
A new report from the Prudential Regulation Authority (PRA) says Britain’s top banks and building societies need to fill a £27.1bn hole in their balance sheets.
The financial regulator warns that UK banks need to raise billions more in capital to cover their risks.
Royal Bank of Scotland was the regulator’s main cause of concern, accounting for £13.6 billion of the total. Lloyds Banking Group accounted for £8.6 billion and Barclays £3 billion. Nationwide had a small shortfall of £400,000.
Co-operative Bank has already identified a £1.5 billion hole in its finances and announced a bond-to-equity ‘bail-in’ plan to deal with the shortfall.
Meanwhile HSBC, Santander UK and Standard Chartered were given a clean bill of health by the regulator.
“While more transparency is welcome, it is debatable whether this disclosure is supportive of pushing economic growth or facilitates more bank lending,” Kevin Burrowes, UK financial services leader at PwC, said.
“UK banks are facing unprecedented regulatory upheaval, with Basel III in particular. Despite the fact that many banks have already made significant investment and progress to ensure their compliance, there remains a growing sense of concern among both regulators and analysts over banks’ overall capital levels.
“The challenge for the banks is that they have got many projects going on in the capital space. Many of those projects compete and some are duplicative. Banks need to align their projects and look at their business as a whole rather than in parts to get to the right capital position.”