U.K. Banks Get BOE Help With Capital Minimums in Weaker Economy
- Move would reverse increase of countercyclical buffer to 0.5%
- U.K. bank stocks rally in London on hopes for capital relief
BOE May Plan Easing Bank Capital Demands on Brexit
U.K. banks made it through the initial Brexit turmoil without undue stress on their liquidity or borrowing costs. Now the Bank of England is moving to reassure investors that even a recession, and the potential impact on earnings and asset prices, won’t put them at risk of breaching minimum capital levels.
With the economic outlook darkening after the nation’s decision to leave the European Union, the central bank will announce as soon as next week that lenders won’t be required to set aside extra capital next year under a measure known as the countercyclical capital buffer, people with knowledge of the discussions said. The buffer is designed to guard against the cycle of banks excessively boosting lending in good times, then slashing credit in a downturn.