LONDON Dec 14 Britain's new banks are likely to
obtain relief on the amount of capital they must hold to cover
the risk of default on home loans, a top Bank of England
official said on Wednesday.
Though 20 so-called challenger banks have entered the market
in recent years, they have yet to win any significant market
share and complain that they face unfair competition from the
four biggest lenders HSBC, Lloyds, Barclays
The newcomers, including the likes of Virgin Money
and Aldermore, argue that they have to set aside
disproportionately high levels of capital compared with the Big
Bank of England deputy governor Sam Woods said this is
because they have to follow standard rules on calculating
capital buffers while the larger lenders have the resources to
use in-house models that typically produce lower figures.
But the situation could change if global regulators at the
Basel Committee reach a deal in January on a new package of bank
capital rules, including a more proportionate approach in
standard rules for home loans.
"There is a reasonable prospect of landing that," Woods told
parliament's Treasury Select Committee.
However, he warned that he won't go soft on capital. "We
need robust capital requirements for all banks," he said.
The queue for banking licences is still reasonably strong
after the 20 already authorised since 2013.
"I am expecting this number to increase. It was not just a
one-off hump," Woods said.
Regulators are under pressure to boost competition after the
committee ripped apart a recent review of retail banking by the
Competition and Markets Authority for failing to take radical
Treasury Select Committee Chairman Andrew Tyrie said that
lawmakers are "very eager" to see millions of retail bank
customers get a better a deal.
(Reporting by Huw Jones; Editing by David Goodman)