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Text size [+][-]  Thursday March 18 2010GLOBAL EDITION

Considered view
18 Apr 2008 12:55

Quid pro quo

RUN THE NUMBERS
 

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UK banks are coming under increasing regulatory pressure to raise fresh capital. The Financial Services Authority has been conducting detailed and intense discussions with individual banks surrounding their capital positions, involving rigorous stress-testing of their balance sheets, according to someone familiar with the process.

These discussions come ahead of an expected announcement next week by the Bank of England of new measures to ease bank liquidity problems. This is likely to include a new facility to allow banks to swap mortgage assets for government bonds.

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HBOS and Barclays head the list of banks likely to follow RBS’s lead with rights issues. This is the price of an informal quid pro quo with the authorities, which are expected to agree emergency support next week. Together, these moves should settle nerves.

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