Mr Lilley: To ask the Chancellor of the Exchequer which measures his Department has introduced since 2008 to require UK-based banks to hold additional capital.
Greg Clark: The Government supports the implementation of the Basel international standards. The Capital Requirements Directive (CRD) 4 improves both the quantity and quality of regulatory capital banks are required to hold. CRD 4 also provides supervisors with a range of discretionary tools for increasing firms’ capital requirements.
The Banking Reform Bill will from 2019 require ring-fenced retail banks to hold an additional equity capital buffer above and beyond the new international standards. Ring-fenced banks and UK-headquartered global banking groups will also be required to hold a minimum amount of loss-absorbing bail-in debt.
In addition, the Government has created the Financial Policy Committee (FPC) at the Bank of England, charged with identifying, monitoring and taking action to remove or reduce systemic risks to the stability of the financial system. Among the FPC’s powers will be the power to vary capital requirements in certain circumstances.