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2nd September 2011

UK considering 3X greater liquidity levels for banks

Andrew Tyrie, chairman of the Treasury Select Committee, has voiced concerns over the proposed UK liquidity regulations proposed. The Financial Services Authority is proposing that banks be required to hold 90 days worth of liquidity. This compares with the Basel III recommendation of 30 days. Another difference is that under Basel III recommendations covered bonds would be allowed (bonds backed by mortgages), whilst the FSA is proposing that covered bonds not be allowed.


The FSA proposal would kick in during 2013. This is the same time as the banks are building up for the Basel III capital requirements and in addition it is widely believed that Britain will require universal banks to hold separate capital for their retail banking operations, separate from any capital required for capital market and investment banking operations, requiring a further additional of capital.


[See Newslink: UK Retail ring-fencing not before 2015 ]