Capital surcharge 'set to hit banks'

13 May 2011

Some of the biggest banks in the world are likely to be hit by capital surcharges, it has been claimed.

Global regulators told the Financial Times that these sums will increase progressively according to a number of factors.

These include the size of the lender, how simply it could be replaced in times of crisis and how connected it is to other banks.

According to the newspaper, the plans would be good news for large, domestically-orientated banks in China and Japan, as well as second-tier lenders in Europe and the US.

The complex structure and global reach of the biggest banks in the US and Europe mean they are likely to be hit with larger surcharges, it explained.

Richard Reid, research director at the International Centre for Financial Regulation, said: "This opens up another whole series of issues which relate to the amount of discretion that the authorities will have."

Bloomberg recently reported that banks in China are set to increase their reserve requirements as they attempt to restrain prices.

By Asim Shah

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