Bank of England’s Woods seeks to draw a red line in banking rules

BoE Deputy Governor Sam Woods said a strategic review had examined whether the bank’s banking regulatory arm, the Prudential Regulation Authority, which he heads, should continue to focus on maintaining and reinforcement of existing rules.

A high-level internal debate concluded there was a need to keep “at the forefront of our minds” the lessons of the global financial crisis, when Britain bailed out several undercapitalized banks, Woods added.

Banks and some lawmakers have called on regulators to put more emphasis on competitiveness post-Brexit, prompting a warning from the International Monetary Fund.

An industry push to relax rules that require banks to wrap their retail arms with additional capital also appears to have failed.

Overhauling insurance capital rules and creating a simpler regulatory regime for smaller banks will help competitiveness without undermining standards, Woods said.

The PRA, funded by levies on the companies it regulates, will hire 100 more people, bringing its total workforce to 1,440.

The PRA’s budget for the year starting this month will rise to £320.9m, up £24.3m or 8.2% on the previous year.

(Reporting by Huw Jones; Editing by Catherine Evans)

By Huw Jones