View more on these topics

Banking reforms could penalise low-risk lenders, Nationwide warns

Bradley-Chappell: restrictions

UK banking reforms could hit mortgage lending and punish low-risk lenders, Nationwide claims.

Under proposals laid out by Sir John Vickers in the Independent Commission on Banking, lenders will need to hold significantly more capital to guard against shocks.

The ICB suggests a system split into risk-weighted capital buffers and a leverage ratio set against all assets regardless of risk.

The government has accepted the reforms and chancellor George Osborne is set to reveal the final plans for the ICB proposals in his annual Mansion House speech to the City on June 14. However, Nationwide believes the leverage ratio would punish low-risk institutions by treating them the same as high-risk lenders.

Andrew Baddeley-Chappell, head of mortgage strategy and policy, says: “For a building society, this is not as straightforward as it is for the banks.

“Building societies may be forced to restrict the amount they lend in order to keep within the new higher capital ratios.”

He adds: “However, we hope that the White Paper, which we expect in June, will recognise these issues and will not impose ICB recommendations without modifications.”



Shadow MPC – June 2012

Cutting the base rate is not an option as while it would ease pressure on borrowers it would pile it on for the banks. With a brighter outlook for inflation further quantitative easing is not necessary yet, but that could change if Eurogeddon comes

The Mortgage Mole

The brokers’ friend London mayor Boris Johnson paid a visit to the offices of the Coreco Group last week to promote apprenticeships in financial services.


News and expert analysis straight to your inbox

Sign up