BofE’s boost for small banks

SMALL banks could be given a boost under Bank of England plans to relax tough rules.

Since the financial crisis, lenders have been forced to hold a bigger capital safety net once they reach a certain size, in case they collapse.

The aim is to avoid taxpayers footing the bill, but small banks including TSB and Metro have complained that the rules are making it harder for them to grow. In a letter to 11 banks, seen by the MoS, the Bank of England said it is considering ditching a rule that requires banks with at least 40,000 current accounts to raise the extra capital.

It said: ‘There may also be scope for the bank to significantly raise or even remove the indicative transactions accounts threshold. We propose to work closely with you... to assure ourselves that this would be a feasible prospect before making any decision to change or remove the transactions account threshold.’

One bank boss said ditching the requirement would make Britain a more attractive place for start-up banks to grow.