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BoE's King says UK banks don't need more public money

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(Globalpost/GlobalPost)

LONDON (Reuters) - The Bank of England said on Wednesday that its recommendations for Britain's banks to plug a 25 billion-pound capital shortfall by December won't call on further taxpayer funds.

"The meeting of these recommendations does not require additional public funds. Banks can meet the recommendations in other ways such as through restructuring," Mervyn King said in a statement.

BoE Deputy Governor Andrew Bailey, who also heads Britain's new Prudential Regulation Authority, said around half of the shortfall was covered in plans the banks have already drawn up.

"We are not saying that those plans are absolutely baked in, and have been given a seal of approval. They will be scrutinised by the PRA. But if you add the numbers up that is where you get to," Bailey said.

King dismissed criticism that fresh pressure on banks to raise capital will hinder lending to the sluggish economy.

"Far from reducing lending, today's recommendations will support lending and promote growth. A weak banking system does not expand lending," King said.

"The better capitalised banks are the ones expanding lending, and it is the weaker capitalised banks that are contracting lending," King added.

(Reporting by William Schomberg and Huw Jones)

http://www.globalpost.com/dispatch/news/thomson-reuters/130327/boes-king-says-uk-banks-dont-need-more-public-money