British banks: G-20 agreement will contribute to stable recovery

The G-20 decision to link increases in bank capital to economic growth strikes the right balance between reform and recovery, the British Bankers' Association said today. The statement issued by world leaders after their Toronto meeting recognises the work already undertaken by some countries to build bank capital reserves at a measured pace to preserve economic growth, but does not set difficult obligations on others still struggling to achieve recovery, said BBA chief executive Angela Knight.

"This decision looks a sensible compromise. Banks' capital holdings have increased significantly in the UK since the credit crunch began, and the banks agree that the new proposals will increase stability further. The big question has been one of the timeframe: the more capital the banks are holding, the greater the limit on what they can lend. The G-20 statement clearly recognises, as we all do, that the new measures be phased in over a time frame which safeguards economic recovery and the ability of markets to provide funding to individuals and business customers.

"We agree with the G-20 that a great deal has been accomplished on the road to regulatory reform. There is an enormous amount of detailed work being undertaken in the BBA and elsewhere to determine what the future capital regime should look like, and how best to balance the need to deliver to individuals and businesses a guarantee of greater bank stability while also providing them with the funds they need. It is critical to get this detail right."

"We welcome the G-20 leaders' pragmatic approach, and pledge to work with their authorities to deliver a more robust and reliable banking system for the future."

London, UK , June 29 th, 2010


Source: British Banker’s Association, London, UK, WWW.BBBA.ORG.UK

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