March.27 - Major UK banks must raise £25 billion in extra capital to keep regulators happy after an inquiry into their financial health was published. Hayley Platt reports
£25 billion is today's daily digit - the extra capital Britain's major banks need to keep regulators happy. A serious amount, but not as much as some analysts were expecting. Oliver Burrows is from Rabobank. SOUNDBITE:Oliver Burrows, Senior banking analyst, Rabobank, saying (English): "I believe the market was expecting a number of undercapitalisation in the UK banking system of around 60 billion, so there'll be a knee jerk reaction to it only being £25 billion but in the larger context of things I think the report is fairly positive." The Bank of England's Financial Policy Committee carried out the survey. It says not all banks will have to pay, but they've haven't disclosed which ones will pay what. The extra capital is needed to ensure banks are sufficiently funded should they run in to future difficulties. It's recommended they hold a core tier 1 capital ratio of 7% by the end of this year. SOUNDBITE:Oliver Burrows, Senior banking analyst, Rabobank, saying (English): "Some banks don't have to change as much under the new regulations that are coming, for example Lloyds, whereas the Barclays and the RBS's of this world have to restructure quite significantly, particularly pulling away from investment banking operations." Britain's four biggest banks have hit the headlines - and they've all had to pay fines for mis-selling loan insurance, totalling 14 billion pounds. It's thought lenders will face further fines in the next three years. But the main challenge for the government is to make the banks it holds stake in - RBS and Lloyds - marketable again. Replenishing capital buffers is an important step on the road towards selling its stakes by the next UK election in 2015.