Major banks in the UK are benefitting from more relaxed rules regarding their capital and liquidity, it has emerged.
The Financial Services Authority (FSA) has decided to loosen its regulations in this area in an attempt to stimulate a period of improved lending as Britain continues to struggle with the impact of its double-dip recession, the Financial Times reports.
Under the terms of the new requirements, the regulator has informed financiers they will not have to hold any additional capital against loans they issue that qualify under the government's new Funding for Lending Scheme.
In addition, the FSA has also opted to remove the stipulation that UK banks will need to comply with the Basel III ruling of a core ratio of ten per cent of their assets by the end of next year.
Andrew Bailey, head of the body's prudential business unit, told the news source: "The goal is to avoid rapid deleveraging that would harm activity in the economy."
By Claire Archer