UK banks 'should boost capital buffers'

2 December 2011

British banks should look to boost their capital holdings even further in the near future to ensure they are fully protected.

That is according to Mervyn King, governor of the Bank of England, who has told UK financiers they need to make such provisions sooner rather than later.

Speaking at the start of the Financial Stability Report, the official indicated companies must look to restrain bonuses and dividends while also keeping up their lending to the real economy.

This, he noted, would help them build up their reserves to act as a barrier between them and the ongoing eurozone debt crisis.

"It is sensible to raise the capital buffer further in order to improve resilience in light of the continuing threat to UK financial stability," Mr King stated.

These comments echo those made by Hector Sants, chief executive of the Financial Services Authority, who, according to Sky News, recently told British banks to accelerate their contingency planning for the end of the eurozone.

By Asim Shah

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