Anthony Hilton: Banks can keep loans up if they change culture

Every time someone in government suggests the banks would be safer if they held more capital against their loans, the banks say they could only increase their capital by cutting back on their lending. It is one of the ways they routinely scare the government.

On Tuesday a poacher turned gamekeeper exposed this claim for the nonsense it is. Michael Cohrs made his career at Goldman Sachs but he is a member of the group in the Bank of England whose job it is to keep the system safe for the future. In a speech on Tuesday he said banks could easily meet such demands without it having a material effect on their ability to service their clients.

Mr Cohrs says they could cut back without diminishing their ability to supply credit or lend to SMEs. But it would require them to change their culture.