UK govt rejects calls to tighten banking leverage rules

12 March 2013

The UK government has no plans to implement stricter regulations relating to the amount of money banks are able to leverage for lending and investments.

That is according to Greg Clark, financial secretary to the Treasury, who told the House of Commons yesterday (11 March) that the Conservative-Liberal Democrat alliance is satisfied with its current rules in this area.

At present, the administration will impose a leverage limit of 33 times their capital on lenders.

However, a new report from the Parliamentary Commission on Banking Standards called on the government to go further and include provisions such as the ability to impose "industry-wide separation" if Basel III ring-fencing policy is judged to be failing.

Nevertheless, Mr Clark has insisted that such measures are not deemed necessary and insisted the government will stick to the international standard it is currently pursuing.

"Our view is that at this time we should follow the international approach, to press for countries to have a power to set a higher ratio for 2018 following a review in 2017," he noted.

By Gary Cooper

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