Banks must pocket profits

BANKS should take advantage of recent profits they have made to bolster their balance sheets, the Bank of England executive director for financial stability Andrew Haldane said yesterday.

“There is a strong case for banks, in the UK and internationally, pocketing this windfall rather than distributing it to either staff or shareholders,” he said in a speech in Liverpool.

He added: “This would allow banks’ balance sheets to be repaired while supporting lending to the real economy.” But he noted that there was little sign of this happening so far.

Haldane said future crises may not be avoidable but that their frequency and scale might be moderated by macro-prudential reforms. He also recommended changing debt contracts to account for a future slump.