Britain’s banks have not dipped into their capital buffers to lend to customers during the pandemic, despite being encouraged to do so.
Most big banks have built up their capital strength in the past year, despite being told by officials to deploy money to help businesses, The Times reported.
The Prudential Regulation Authority said that it believed “all elements of the substantial capital and liquidity buffers that have been built up by banks exist to be used as necessary to support the economy.”
But banks are reluctant to dip into the buffers as it could spark fears of a need to tap investors for more capital.
The industry is also worried about how long regulators will give them to rebuild those coffers.
According to The Times, banks have so far avoided tough choices about using the buffers because they have been able to deploy the government’s lending schemes to help businesses, which require a relatively small about of capital from banks.
The issue could return later in the year, however, when the schemes end and banks start asking customers for payments.