Business

Bank of England says British banks need fresh capital

Canary Wharf
Image caption British banks have a new regulator, the Financial Policy Committee

British banks needs to raise fresh capital as soon as feasible, according to a new Bank of England regulator.

Although banks have been bolstering their finances, they still do not have enough funds in reserve to withstand potential financial trouble, the Financial Policy Committee (FPC) said.

The FPC said it would review progress made by banks at its next meeting in June.

Next year, the FPC will gain legal powers to order banks to take action.

The FPC has now gone into more detail about the powers it would like to have.

It would like to be able to order banks to raise or lower their capital buffers.

It would also want the power to tackle specific parts of the economy, to snuff out potential problems.

For example, it could act over commercial property investment if it thought there was a bubble developing in that market.

Finally, the FPC would like to be able to introduce limits to the amounts banks can borrow as a proportion of their assets.

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