Bank of England Calls for an End to Lobbying Practices

Despite objections from Barclays and Nationwide, city regulators have largely ignored their pushback against the upcoming liquidity rules. Regulators insist these changes are crucial and should be implemented as soon as possible, even before the 2018 global deadline.

Paul Tucker, the Deputy Governor of the Bank of England in charge of financial stability, dismissed the banks’ protests as “totally unacceptable” and stands firm in the decision. He has emphasized to MPs the urgency of putting these rules into effect quickly to reduce risk exposure in the UK’s highly leveraged banks.

Both Nationwide and Barclays have actively resisted these changes, labeling the quick implementation a “shock.” They argue it could harm their financial position and restrict their ability to lend. Former governor Mervyn King highlighted this opposition during a recent meeting with MPs. The banks had even tried appealing to the Treasury and Number 10 to delay the regulations until 2015. Barclays suggested they might cut back on lending to households and businesses if the rules are enforced this year.

According to a ratings agency, UK banks have enough capital to handle expected losses in both regular and severe financial stress scenarios. Meanwhile, a City Index spokesperson noted that the UK services sector has recently grown, indicating a potentially faster economic recovery in the coming months.

The controversy initially arose when US regulators decided to enforce the law—setting new borrowing limits and raising reserves—well before the Bank for International Settlements deadline. This move has upset many businesses, who argue that strict lending ratios may create tougher conditions for US banks. Federal Reserve Governor, Dan Tarullo, claimed the Basel III leverage seems too low to effectively balance the internationally agreed risk-weighted capital measures. Banks are concerned about being pushed towards safer capital and lending levels.

Andrew Tyrie, head of the Treasury select committee, expressed worries that banks might use their power for personal gain. Andrew Bailey, the head of the Prudential Regulation Authority, acknowledged banks had contacted George Osborne but stressed that the PRA’s independence still lies under the chancellor’s oversight. He mentioned the importance of establishing a transparent process with accountability. Martin Taylor, former Barclays chief, commented that the banks are making a fuss because the PRA and Andrew Bailey are doing their jobs, arguing it might be overdue.