Banks warn tough new capital rules hit lending to small firms

 
Tim Wallace
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BRITISH banks are being hit hard by incoming regulations, hurting their ability to lend and so damaging the economy, TheCityUK warned yesterday.

The lobby group particularly singled out the impact on small firms, who are more reliant on bank funding than bigger businesses, and called on the government to slow down the implementation of the new rules to limit the damage being caused.

New capital requirements in the UK are tougher than those being imposed on banks in the rest of the EU, meaning the government should not worry about stability being undermined by a slower timetable, it argued.

But TheCityUK also said the state needs to do more to promote non-bank lending to SMEs to reduce their dependence on banks.