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George Osborne Tells Mark Carney To Consider Effects Of Leverage Ratio Rules

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George Osborne has told the Bank of England that it should consider the potential effect on mortgages and other lending activity when introducing new rules on banks’ financial safety nets.

On Friday the Bank published its much-anticipated review of the leverage ratio – the amount of capital that banks should put up to protect against loans going bad – and said that one aspect of this would depend on an upcoming consultation on large banks’ safety.

By 2019, the UK’s eight biggest lenders will have higher leverage ratio requirements than their smaller counterparts, with the difference depending on their assigned systemic risk buffer (SRB) – a measure of their purported financial safety.

The higher a bank’s SRB, the higher its leverage ratio will be, meaning it has to put up more capital to protect against bad loans.

The Bank of England will begin a consultation on the systemically-important banks' SRBs next year.

In a letter to the Bank’s Governor, Mark Carney, the Chancellor said this should take into account “the levels of lending to the real economy; the degree of competition in retail banking; the impact on lenders with low average risk weights [such as big mortgage lenders]; and the maintenance of a diverse set of business models in the banking industry”.

Despite Mr Osborne’s concerns, banks and building societies breathed a huge sigh of relief on Friday as the Bank of England’s leverage ratio rules proved to be less onerous than expected. Shares in Barclays – seen as most at risk from a punishing leverage ratio – rose 8pc, with other banks also rising. [more at link]


http://www.telegraph.co.uk/finance/bank-of-england/11202337/George-Osborne-tells-Mark-Carney-to-consider-effects-of-leverage-ratio-rules.html?WT.mc_id=e_3651847&WT.tsrc=email&etype=frontpage&utm_source=email&utm_medium=Edi_FAM_New_2014_11_1&utm_campaign=3651847

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im sure the incumbent civil servants at the BoE thanked the Chancellor in his temporary position for his expert opinion.

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"Your remit is rock bottom interest rates forever."

Mr Cameron made that clear.

No letter required (signed or unsigned).

Edited by billybong

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I don't get this.

Ok if I want to drive to Scotland I have to drive the first mile followed by the second mile then onto the third mile.

This is just numbers into a computer and can be done instantaneously. So why all this cr@p about building up reserves over time.

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he's worried that leverage ratio rules might have a, "potential effect on mortgages and other lending activity"?

:blink:

If he is worried, maybe he just wanted an explanation because otherwise, he is a fracking IDIOT.

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