Bailey defends capital push, explains pillar two reversal
The Financial Services Authority’s Andrew Bailey defended the organisation’s push for banks to hold more capital on Wednesday morning while at the same time explaining moves to allow banks to run down their pillar two buffers to support retail and SME lending. He also signalled his approval of contingent capital instruments.
Insufficient capital buffers to deal with tail risks like a eurozone break-up and higher funding costs chewing into profits were among the reasons low capital ratios could constrain lending, Bailey said.
But uncertainties about the economic outlook meant the regulator was taking a soft approach towards making banks
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