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"British banks warn that upcoming banking regulation could shave two percentage points off the country’s economic growth," said Sky News today, citing an unpublished report by PriceWaterhouseCoopers.
Forcing banks to keep more capital on their balance sheets would stymie bank lending and prevent credit flowing into the economy, the report quoted Sky.
In a statement, the British Bankers’ Association confirmed PwC was carrying out an analysis on behalf of the banks on the economic effects of capital, liquidity and other proposals being considered for the industry.
“The analysis is yet to be completed but we will at all times be discussing with the various authorities the issues that arise from the study,” BBA said.
Sky said the report looked at measures being proposed by the financial regulator, the Financial Services Authority, and at the international level, but did not include the bank taxes recently proposed by the International Monetary Fund.
The broadcaster said the banks — including Barclays, HSBC and the Royal Bank of Scotland — and the BBA had wanted to delay publication until after the UK’s May 6 general election.
On the campaign trail, Prime Minister Gordon Brown told reporters: “We have got to reform the banks, the banks have got to serve the public.
“The recapitalisation of the banks and a proper system of remuneration and dealing with liquidity ratios is absolutely crucial to the future of British industry and the future of everybody who is a homeowner in this country.”
Barclays earlier on Friday followed other banks in reporting a fall in bad debts as Britain and other economies pulled out of recession.
In a statement at the bank’s AGM, Chairman Marcus Agius told shareholders: “We fully recognise that changes to regulation need to be made.
“But there are important and difficult trade-offs to be made between improving the stability of the financial system, reducing the risk of a recurrence of a financial crisis and stimulating and supporting economic growth.”
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