LONDON, March 9 (Reuters) - Britain's top banking regulator has dismissed critics who say risks at banks cannot be fully understood and therefore lenders must hold far more capital.
Andrew Bailey, deputy governor of the Bank of England (BoE), said he disagreed with the "big equity school" which argues lenders should hold capital equivalent to 20 percent or more of their risk-weighted assets because they are too complex to supervise easily.
Bailey, who heads the BoE's Prudential Regulation Authority, said the best approach was the current mix of capital buffers, proper risk management, supervision, and tools for winding down a bank when in trouble.
"I do not accept the proposition that we can only abandon all hope of understanding the risks in banks," Bailey said in a speech to a banking event hosted by Barclays.
He is the latest senior BoE official to dismiss criticism from John Vickers that lenders don't hold enough capital. Vickers is the architect of a reform that will force lenders to "ring fence" their retail arms with more capital from 2019. (Reporting by Huw Jones; Editing by Mark Potter)