Bank of England urges banks to raise capital

Mar 24, 2012 |

IANS

London

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British banks need to raise more capital as they are not reserving enough funds to withstand potential financial trouble, the Financial Policy Committee (FPC) under Bank of England (BOE) warned in its report released on Friday.

The committee 'advised banks to raise external capital as early as feasible', reported Xinhua.

The FPC, which will gain legal power to order banks to take action next year, said that 'capital is not yet at levels that would ensure resilience in the face of prospective risks'.

It would review progress made by banks at its next meeting in June, the BOE watchdog added.

According to the 11-member committee, 'the overall outlook for financial stability remains fragile' though immediate financial market tensions have eased.

In the report, FPC also has requested powers that would enable it to tackle specific parts of the economy and introduce limits to the amounts banks can borrow as a proportion of their assets.

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