Smaller banks are urging the Bank of England (BoE) to reconsider its proposed rules for managing failing lenders, contending that these measures surpass international norms.

The BoE’s consultation paper suggests that banks should maintain higher levels of loss-absorbing capital to ensure stability during financial crises. However, financial institutions argue that these requirements are more stringent than those imposed by other global regulators, potentially placing UK banks at a competitive disadvantage.

They also express concerns about the increased operational costs of holding additional capital reserves. The BoE maintains that these measures are essential to safeguard the financial system and protect taxpayers from bearing the costs of bank failures.

The consultation period has concluded, and the BoE is reviewing feedback before finalising the regulations. The outcome will significantly impact the banking landscape and its alignment with international financial standards.

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