Bank of England liquidity rules criticised

13 December 2011

UK financiers should be able to include securitisations as part of their liquidity coverage ratio statistics, a leading figure in the industry has claimed.

According to Simon Hills, executive director of prudential capital and risk at the British Bankers' Association (BBA), the Bank of England (BoE) should reform its rules relating to such figures, Mortgage Strategy reports.

Mr Hills explained that current regulations - which permit lenders to hold sovereign debt and non-financial corporate/covered bonds but not securitisations - are holding the country's banks back in comparison to their rivals in mainland Europe and the US.

He went on to criticise the BoE and the Financial Services Authority (FSA) for this policy, which he believes is stunting the nation's economic recovery.

"If banks are going to lend in the recovery, they are going to need the securitisation markets," the BBA official added.

This comes after the Bank of International Settlements (BIS) indicated that the BoE's asset purchases in 2009 and 2010 may not have had the desired impact on gilt yields.

By Asim Shah

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