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March 29, 2013

British Banks Told to Raise $38 Billion in Capital

British banks must raise a combined £25 billion, or $38 billion, in new capital by the end of the year to protect against future financial shocks, according to a report on Wednesday from the country’s authorities.

The Bank of England, which takes over the direct supervision of British firms like HSBC and Barclays next week, said the new reserves were needed to protect against losses connected to risky loan portfolios, future regulatory fines and the readjustment of banks’ bloated balance sheets.

Mervyn A. King, the departing governor of the Bank of England, said on Wednesday that the need to raise new capital “is not an immediate threat to the banking system and the problem is perfectly manageable.”

The report follows a five-month inquiry by British officials into the financial strength of the country’s banking industry. With the world’s largest financial institutions facing new stringent capital requirements, the Bank of England had been concerned that British banks did not have capital reserves large enough to offset instability in the world’s financial industry.”

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Read full New York Times article here 

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