UK lenders must raise at least 25 billion pounds ($38 billion) to plug a shortfall in capital and cover higher estimates for expected loan losses, potential fines and better risk calculations, the Bank of England said.
The shortfall follows an examination by the Financial Services Authority into banks’ exposures to commercial real estate and euro-area economies, risk models and provisions for compensation and fines over a three-year period. The BoE didn’t provide details for individual lenders or say how many may need to raise capital.
The BoE published the information today after a meeting of its Financial Policy Committee on March 19. It is pushing banks to increase resilience to shocks so they can boost lending and aid an economic recovery. Governor Mervyn King said in November that the capital problem “is manageable but it requires some action now.”