Hike in capital requirements would decimate lending, warns HSBC

An increase of just 1% in capital requirements would take hundreds of billions of pounds out of banks’ lending capacity, according to Douglas Flint, group chairman of HSBC.

Speaking to the Treasury Select Committee to discuss the Independent Commission on Banking’s proposals today, he says raising equity tier one ratios beyond their current rate of 10% would present a risk to the economy.

Flint says that on the basis that HSBC’s capital base is £140bn, a further hike in capital requirements of 1% would take hundreds of billions of pounds of capacity out of lending.

He was responding to a question from a member of the Treasury Select Committee who asked where the banks need to be in terms of capital requirements in order to be safe for the public but still able to take risks and be profitable.