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BBA Conference: BBA warns of over-regulation

The British Bankers Association has warned that an over-regulation of the UK banking sector may hit consumers.

Speaking at this year’s BBA Conference in London, chief executive Angela Knight called for the authorities to carefully assess how capital requirements are forced upon banks.

She said: “It is important to note that the banks are already holding more capital than before the crisis and twice that of the international Basel standards.

“The danger is that an over layering of multiple capital measures could result in an undue constraint being placed on the ability of banks to support households and firms through continuing to lend as the UK emerges from the recession.”

Knight argued that the BBA are not in disagreement over greater emphasis on financial stability. She said: “There has to be the right balance in the application of new standards, an understanding of the impact that they will have on the customer base of the industry and the wider economy.”

Knight also argued against the Bank of England’s call for a smaller banking industry. She said that “big economies require big banks” and by reducing the sector, the UK’s place as a world financial centre could be at risk.

Knight also reminded delegates that it is the largest banks which aid the Government in its own financing.

She said: “Large companies require large banks capable of servicing their requirements in the variety of countries where they do business and international business requires international broad based universal banks.

“Size does not determine complexity, nor does a broad base or universal bank mean that it cannot be successfully operated with the careful attention to relevant risk.”

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