Banks given ultimatum to plug their black holes

Warning to sort out capital shortcomings amid frustration over the delays

Banks have been warned that they have just a month left to agree plans by the Bank of England to plug capital black holes.

It comes amid mounting frustration among regulators about what is being seen as "foot dragging" by the industry over the issue.

Yesterday the beleaguered Co-operative Bank, which remains in talks with its supervisors over its capital position, confirmed plans to cease lending to new business customers as it battles to restore its capital base.

Earlier this week Lloyds and Royal Bank of Scotland said they had agreed programmes to plug their parts of a £25bn shortfall facing the UK industry that was identified by the Bank in March this year.

But it is understood supervisors have still not struck deals with Barclays, which currently doesn't plan a similar announcement, or Santander UK, in addition to the Co-op.

And even though Lloyds and RBS are now in the clear, regulatory sources say they had to be dragged "kicking and screaming" to the table. Both banks said they would be dealing with their problems via a combination of retained profits generated by existing business plans and disposals.

Banks have privately complained of a lack of communication with the Prudential Regulatory Authority, which is the subsidiary of the Bank that assumed oversight of banks' financial soundness under Chancellor George Osborne's shake-up of City regulation.

In a statement, the Bank said: "There should be no confusion. What Lloyds and RBS have signed up to is consistent with the Financial Policy Committee's recommendation. We will hold them to those recommendations."

Co-op, which acts as banker to the Labour Party, said it took the decision to pull out of new commercial lending as part of a strategic review instigated by the Co-operative Group's chief executive Euan Sutherland.

Some analysts have suggested that Co-op could need to find as much as £2bn to satisfy watchdogs. The bank was plunged into crisis after Moody's downgraded its credit rating by six notches to junk not long after its attempt to buy Verde from Lloyds Banking Group collapsed.

Its chief executive Barry Tootell resigned the next morning.

While its review is ongoing Mr Sutherland, a former chief operating officer of B&Q owner Kingfisher, has decided the bank's primary focus should be on "serving and expanding our presence amongst retail consumers".

Existing business clients will, however, continue to be "supported", Mr Sutherland said: "This decision is part of our commercial strategy to play to the traditional strengths of the bank."

One bank not in its regulators' crosshairs is HSBC, largely thanks to its enormous deposit base which means it does not have to rely on wholesale money market funding for its lending.

The bank, however, saw 11 per cent of its investors vote down its remuneration report in the wake of its £1.2bn fine from US watchdogs for acting as a conduit for dirty money. Its chief executive Stuart Gulliver received an annual bonus of nearly £2m despite this for his "strong leadership" and "personal behaviour". In total he racked up £7.4m through the various elements of his pay.

Chairman Douglas Flint apologised for the scandal at the bank's annual meeting yesterday in London along with other mis-steps such as the mis-selling of payment protection insurance.

News
news

Emergency call 'started off dumb, but got pretty serious'

News
people

Britain First criticised for using actress's memory to draw attention to their 'hate-filled home page'

Arts and Entertainment
JK Rowling is releasing a new Harry Potter story about Dolores Umbridge
arts + entsJK Rowling to publish new story set in wizard's world for Halloween
Arts and Entertainment
Benedict Cumberbatch has refused to deny his involvement in the upcoming new Star Wars film
filmBenedict Cumberbatch reignites those Star Wars rumours
PROMOTED VIDEO
News
Russell Brand was in typically combative form during his promotional interview with Newsnight's Evan Davis
people

Thought you'd seen it all after the Jeremy Paxman interview?

Arts and Entertainment
On The Apprentice, “serious” left the room many moons ago and yet still we watch
tv

Greatest mystery about the hit BBC1 show is how it continues to be made at all, writes Grace Dent

News
i100
Life and Style
tech

Voices
Funds raised from the sale of poppies help the members of the armed forces with financial difficulties
voicesLindsey German: The best way of protecting soldiers is to stop sending them into conflicts
Arts and Entertainment
A scene from David Ayer's 'Fury'
film

"History is violent," says the US Army tank commander Don "Wardaddy" Collier

News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Data Analyst/Planning and Performance – Surrey – Up to £35k

£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

CTO / Chief Technology Officer

£100 - 125k: Guru Careers: A CTO / Chief Technology Officer is needed to join ...

Day In a Page

Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

Paul Scholes column

I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

While other sports are stalked by corruption, we are an easy target for the critics
Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker