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March of the intermediary

Mortgage View

HSBC group chairman Douglas Flint says raising banks’ core tier one capital ratios to 10 per cent will stunt lending.

The Independent Commission on Banking’s interim report, published in April, proposed increasing banks’ current 7 per cent minimum capital adequacy reserves to 10 per cent.

Giving evidence to the Treasury select committee last week, Flint said even a 1 per cent inc-rease in capital requirements will cut lending by billions.

He said: “Our capital base is about £140bn globally, so if you stick on another 1 per cent, you are taking hundreds of billions of credit capacity out of lending.”

In another TSC meeting last week, Barclays chief executive Bob Diamond warned that capital requirements of 10 per cent are “too high” and would affect lending levels.

Emba group sales and marketing director Mike Fitzgerald says: “Forcing banks to hold too much money is wrong, it will only inhibit lending.”

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