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Vince Cable slams Bank of England as ‘capital Taliban’

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Vince Cable

Vince Cable has criticised the Bank of England, labelling the institution a “capital Taliban” and arguing that it has held back the UK recovery by placing financial burdens on banks.

In an interview with the Financial Times, the business secretary said the Bank’s demand for lenders to build high capital buffers against future shocks has restrained lending to the country’s small businesses.

Cable told the newspaper: “One of the anxieties in the business community is that the so called ‘capital Taliban’ in the Bank of England are imposing restrictions which at this delicate stage of recovery actually make it more difficult for companies to operate and expand.

“It is clear that the main banks are failing to support good British companies in key areas like exporting and innovation.”

Last month, the Bank’s Prudential Regulation Authority told the UK banks to find another £13bn of capital in addition to the money already raised to strengthen their balance sheets.

Royal Bank of Scotland, Lloyds Banking Group, Barclays, Co-operative Bank and Nationwide Building Society were the major lenders deemed to have a shortfall in capital.

Nationwide chief executive Graham Beale then criticised the “crude” measure used by the PRA to assess banks’ financial strength and said it would act as constraint on low-risk lending.

“The leverage ratio is an unsophisticated measure which ignores the quality of an organisation’s assets or its business model,” he told the FT.

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. is this the same person who criticised the banks for lending too much and not having enough capital cover?

  2. How this “similar-to-a-door-handle”-end managed to survive Murdochgate is one thing; comparing banks to the Taliban???

    Then again, with the likely popularity of the Lib Dems at the next general election, I dare say he’s trying to drum up as much support as possible from the readership of the tabloids…

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