Bank of England tightens capital requirements as debt surges
Bank of England tightens capital requirements as debt surges
GETTYThe Bank of England has expressed concern over household debts
29 June, 2017, 09:05
The decision was unveiled alongside the Bank's twice-yearly Financial Stability Report and is a signal that the Bank feels the risks of a credit crunch have now receded and it is more concerned about an excess of lending. Previously some banks were able to game the system by assuming they'd pass along less than the full 3 percent increase to borrowers, the BOE said.
The Bank's financial policy committee has raised the counter-cyclical capital buffer rate from zero to 0.5 per cent, which must be complied with from June 2018.
The industry can cope with the demands: United Kingdom banks' combined common equity Tier 1 capital ratio was 13.9 percent in March, and their combined leverage ratio is over 5 percent, well above the BoE's proposed minimum of 3.25 percent.
"Consumer credit has increased rapidly", Governor Mark Carney said.
About two-thirds of private new vehicle buyers do so through personal contract purchase (PCP) deals - usually from the auto makers, but often from banks.
The Bank's assessment said loss rates on consumer lending "are low at present", driving margins on new lending lower.
Borrowers often do everything they can to pay off mortgages, but are less afraid about defaulting on credit cards or auto loans.
Carney said the boom in vehicle loans is a major factor behind the pick-up in consumer debt, but that he remained "sanguine" about the banking sector's overall exposure to it.
These allow people to secure cars for monthly payments in a finance arrangement that means the owner in effect leases a vehicle for three or four years rather than buying it outright.
Even so, the FPC remains anxious about signs of excess, particularly in vehicle finance and credit cards.
Consumer credit, which excludes mortgages, grew by 10.3 per cent in the year to April, the fastest rate since 2005.
The report called on banks to tighten affordability tests for home loans.
"The current environment is also likely to have improved the credit scores of borrowers", it said.
However, the Bank has found a range of approaches being applied by lenders resulting in inconsistencies across the market.
"Lenders may be placing undue weight on the recent performance of loans in benign conditions", the FPC said.
His comments come after Andy Haldane, the Bank's chief economist, surprised markets last week by signalling that he was poised to vote for a rate hike in the second half of the year if growth remains stable. Carney said that if wage growth picks up and business investment increases then he will reconsider the case for holding the BOE's benchmark rate at a record low of 0.25%.
Bank of England deputy governor Sir Jon Cunliffe has joined the debate over raising United Kingdom interest rates, indicating now is not the right time for a rise.
The primary responsibility of the Financial Policy Committee (FPC), a sub-committee of the Bank of England's Court of Directors, is to contribute to the Bank of England's objective for maintaining financial stability.
Carney said the FPC's action did not in itself imply that monetary policy was also about to tighten.
The Co-operative Bank has secured £700m of funding to meet regulatory capital requirements, staving off a once-mooted sale. The bank added that the Bank of England's Prudential Regulation Authority supported the rescue plan.
You can only get so far with having lower level names dominate the show and then put one big match on to try and balance it out. That was suggested as "The King of Strong Style" was seen backstage watching Corbin defeat Sami Zayn in a match.
In related news, insider Steve Crummett sold 13,174 shares of Morgan Sindall Group PLC stock in a transaction on Friday, May 19th. Winslow Evans Crocker accumulated 4,380 shares or 0% of the stock. 435,528 shares of the company's stock traded hands.
He told them that the experience will be better on PC, and that Xbox is choosing to focus on mixed reality or augmented reality. Spencer's comment does make sense in the perspective that the Xbox One X offers specifications that Sony can't now rival.
If found guilty, the standard ban for testing positive to a suppressant like this is believed to be about one or two months. It is classed as a banned substance in accordance with Australian Rule of Racing 81B.
A Department of State spokeswoman won't say what envoy Joseph Yun gleaned about the medical conditions of the other Americans. Residents of the northern Cincinnati suburb tied blue-and-white ribbons, the school colours, to trees near the family's home.
Cosby stemming from other possible victims, his defense attorney said "None of these accusations have ever been vetted". I'm not going to plea to something I did not do", Cosby said, during an exclusive interview with the NNPA Newswire.
The announcement comes as former National Basketball Association player Dennis Rodman is paying a return visit to North Korea . Warmbier also said he had been encouraged by the university's "Z Society", which he said he was trying to join.
Dawid Malan was named man of the match after making the highest score by an England player on their T20 debut. AB de Villiers believes South Africa's excellent Test record in England will work in their favour again.
LSU - playing its fourth game in six days and with Eric Walker out with an injury - turned to the seldom-used Reynolds to start. The Gators had eight players drafted in the first 10 rounds of last year;s Major League Baseball draft but went 0-2 in Omaha.
Iraqi army says "Daesh is finished" in Mosul
Sporadic sniper fire could be heard, and an incoming rocket, as the troops used a drone to survey the insurgents' defences. Islamic State has lost about half the Old City since the battle for the historic district started ten days ago.
Cosby Jury Goes Over Accuser's Testimony During Deliberations
Last week, Pulliam gave a similar statement to ET, again making it clear that she doesn't "condone or support sexual assault". Prosecutors have portrayed Cosby as a serial predator. "A 30-year consecutive sentence would be a life sentence", she said.
Martial denies exit rumours
Anthony Martial has completely shut down all rumours that his representatives have discussed an exit from Manchester United . Alongside the written message, Martial included a red emoji - reaffirming his commitment to United.
Baby Driver is not your average crime thriller
His tough-looking passengers ( Jon Hamm , Eiza Gonzalez and Jon Bernthal ) exit with comical menace, assault weapons in hand. Baby is an expert wheelman employed by Doc ( Kevin Spacey ), a shadowy crime king specializing in impossible heists.
Smith tips JT to line up for series decider
Hayne's first half try , his 11th in Origin, made him NSW's equal leading try scorer with former centre Michael O'Connor. One Nation leader Pauline Hanson lined up for Queensland , urging people "don't laugh" when she pulled on the guernsey.
Tillerson urges nations to negotiate to resolve Qatar crisis
Tillerson said that "a productive next step would be for each of the countries to sit together and continue this conversation". Bahrain, Saudi Arabia, United Arab Emirates (UAE) and Egypt have cut ties with Qatar on terrorism funding charges.
EU Fines Google $2.7 Billion
A 7-year investigation by the European Commission concludes that the search engine benefited from an "illegal advantage". The company will review the decision and consider an appeal.
NDA's Presidential nominee Ramnath Kovind files nomination
State JD (U) spokesman Neeraj Kumar claimed that they had provided a "political sanjivani" (a life-saving herb) to the RJD. BJP Presidential candidate Ram Nath Kovind files his nomination as the 15th President of India in Parliament House.
Disney, Trump At Odds Over Hall Of Presidents
Prior to 1993, the show simply ended with a speech delivered by an animatronic Abraham Lincoln, as recited by a voice actor. Following a statement from Disney and an editorial review by the outlet, however, it seems these reports weren't accurate.
Burling, Team New Zealand win Race 7 in America's Cup
Because Oracle won the qualifiers, the Kiwis started this America's Cup final on the Great Sound with a negative point. The US win means the racing could continue beyond today. "They outsailed us and had a better boat. really well done".