Expect changes in EU capital directive, says MEP

Liberal Democrat MEP Sharon Bowles, chairman of the European Parliament’s economic and monetary affairs committee, rejected suggestions the UK was facing resistance on its plans to implement recommendations by the Independent Commission on Banking.

The commission had called for a minimum capital buffer of 10 per cent, more than the EU’s capital requirement’s directive.

She said: “It is early days in terms of the the capital requirements directive and crisis management.

“I expect things to be changed by the European Parliament and I know the UK is all uptight about the way in which the capital requirement’s directive does not really allow these higher capital requirements. But that is quite easy to amend.

“A lot of people seem to like the Vickers’ report recommendations and want to go further.”

A spokesman for the Treasury said: “The UK and other member states have called for greater clarity in the current draft of the capital requirement’s directive and are confident it will reflect the international agreement and give countries the necessary flexibility to implement their domestic framework.”

The Council of Mortgage Lenders has previously called for international co-operation on capital requirements. Sue Anderson, head of member and external relations for the CML, said: “This is clearly an issue that is wider than just mortgage lending and how capital holdings relate to it. International consistency would be useful.

“There is is a trade-off between ultra-safe requirements in lending and capital holdings and making sure there is an increase in the flow of lending.”

David Penny, managing director of Somerset-based Invest Southwest, said: “There is a lot of work being done by the banks to give the impression they are keen to lend, when in fact they are less keen than they appear. They have to reduce lending to meet these requirements.”