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Bank capital holes revealed by BoE/PRA 20 June 2013

Royal Bank of Scotland (RBS) Group still has a capital shortfall of some £13.6 billion, according to the latest figures from the Prudential Regulation Authority (PRA).

The latest capital assessment – conducted under the PRA’s new 7% standard mark – also shows that Lloyds Banking Group fails to meet the minimum capital requirement by £8.6 billion, Barclays by £3 billion and the Co-operative Banking Group by £1.5 billion.

The Nationwide Building Society has also been recommended to set aside an additional £0.4 billion to meet the new financial strength requirements.

The British Bankers Association refused to issue a comment on the news, but the Building Societies Association was keen to emphasise that building societies are generally well capitalised with a weighted average core tier 1 capital ratio across the nine largest societies of 13%.

A spokesman added: “The factors outlined by the PRA today are most relevant to the large banks and we remain confident that the building society sector will be at or above the capital levels required under CRD 4 as it is progressively implemented between 2014 and 2018.”

The news comes just hours after chancellor George Osborne outlined the government’s plan for returning the partly-state owned banks, to private ownership.

He told an audience at Mansion House that although the economic news has been “better in recent months” that the recovery still needed to be secured.

He said: “Nothing better signals Britain’s move from rescue to recovery than the fact that we can start to plan for our exit from government share ownership of our biggest banks.”

He outlined three objectives that will guide the government’s approach: “We want to maximize the ability of these important banks to support the British economy. We want to get the best value for money for the taxpayer and we want to do what we can to return them to private ownership.”



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