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U.K. Banks Bracing for Tougher Leverage Ratio Than Europe 

October 30, 2014
Ben Moshinsky, Jim Brunsden, Businessweek

U.K. banks are bracing themselves for tougher debt-financing limits than their European competitors as executives warn that higher leverage ratios will lead to more expensive loans for homeowners.

The Bank of England is poised to join the U.S. in hitting banks with a leverage ratio that is seen exceeding the current global minimum of 3 percent mandated by the Basel Committee on Banking Supervision. The BOE, which took over U.K. banking regulation in 2013, will announce the outcome of a consultation tomorrow at 2 p.m. in London.

Global regulators turned to leverage ratios, the minimum of core capital banks must hold without weighting categories of loans by their riskiness, as part of efforts to help shield the financial system from future crises. Donald Kohn, a member of the BOE’s Financial Policy Committee, told lawmakers last year that the current Basel minimum is “not enough,” while a U.K. parliament panel recommended a 4 percent leverage ratio.

Read more: Businessweek

 
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