Under current plans being considered by the British Independent Commission on Banking, British banks could be subject to capital requirements up to half as much as their minimum equity. An interim report by the Commission, released in April, called for banks to hold equity capital equal to at least 10 percent of their risk-weighted assets. The final report is due to be presented in September and will define how large the debt buffer for British banks must be.
The report is being said to follow the standards set by Switzerland which go beyond the requirements set by international regulators at the Basel Committee. Currently, regulators are working on drafting Basel III which—according to a Financial Times report—could ease some of the tight capital requirements. A draft report of the Basel III document is said to allow banks to apply capital in their insurance subsidiaries to meet the requirements. Banks would also be allowed to continue using hybrid capital.