andyh wrote:
She mentions a new 7% equity they need to have now WUB.
Is this a change to the unlimited FR banking rule then?
Apparently, this is related to the Basel III rules.
www.bloomberg.com/news/2013-03-19/big-ba...all-in-mid-2012.html
Lenders made headway toward meeting their Basel obligations, while the U.S. and European Union struggled to meet a January deadline to start implementing the Basel III accord. The measures -- scheduled to be fully in force by 2019 -- will more than triple the core capital that lenders must hold to at least 7 percent of their assets, weighted for risk.
Actually, I’ve found the actual capital rules which are here:
www.bis.org/publ/bcbs189.pdf
This would make perfect sense because it was said here:
sanctumzone.co.uk/forum/todays-news/9227...-global-economy.html
...that this is going to be used to bring down the global economy. So if you look at the British retail banks, there’s no way they’ve got 7% reserves, I would be highly surprised if the gap in their balance sheet is only £27 billion. In my view, they’ve got no legitimate way of raising it. The reporter in the video mentioned taxpayers; that’s not why I expect to occur this time.
What I don’t really understand is that it’s said on Wikipedia and elsewhere that the Basel III regulations are voluntary. AFAIK British retail banks have an informal agreement with the Bank of England. They make it all up as they go along anyway, so I don’t suppose it really matters, but I’m rather confused as to why they’d need to comply with this if it’s a voluntary arrangement.
Ah, I’ve just learnt something else. I’m learning as I’m typing here!
www.bankofengland.co.uk/pra/Pages/default.aspx
On 1 April 2013 the Prudential Regulation Authority (PRA) became responsible for the prudential regulation and supervision of banks, building societies, credit unions, insurers and major investment firms. In total the PRA regulates around 1,700 financial firms.
The PRA’s role is defined in terms of two statutory objectives to promote the safety and soundness of these firms and, specifically for insurers, to contribute to the securing of an appropriate degree of protection for policyholders.
In promoting safety and soundness, the PRA focuses primarily on the harm that firms can cause to the stability of the UK financial system. A stable financial system is one in which firms continue to provide critical financial services – a precondition for a healthy and successful economy.
The PRA will make forward-looking judgements on the risks posed by firms to its statutory objectives. Those institutions and issues which pose the greatest risk to the stability of the financial system will be the focus of its work.
The PRA was created by the Financial Services Act (2012) and will be part of the Bank of England. It will have close working relationships with other parts of the Bank, including the Financial Policy Committee and the Special Resolution Unit.
The PRA works alongside the Financial Conduct Authority (FCA) creating a “twin peaks” regulatory structure in the UK. The FCA is a separate institution and not part of the Bank of England. The FCA is responsible for promoting effective competition, ensuring that relevant markets function well, and for the conduct regulation of all financial services firms. This includes acting to prevent market abuse and ensuring that consumers get a fair deal from financial firms. The FCA operates the prudential regulation of those financial services firms not supervised by the PRA, such as asset managers and independent financial advisers.
So...this is why the BBC are mentioning this PRA organisation / body:
www.bbc.co.uk/news/business-22982311
And they’re obviously just following the Basel III capital guidelines. The system is run by the Bank for International Settlements, and what they say goes, basically.
