'Taliban' Regulator Makes New Bank Demands

The Bank of England has ordered Britain's major lenders to make new disclosures about their financial health in the coming weeks, stoking criticisms by Vince Cable of the central bank's 'Taliban' instincts.

Sky News understands that the Prudential Regulation Authority (PRA), the new wing of the Bank (BoE) responsible for maintaining the stability of the banking system, has written to the major UK banks in recent days demanding that they reveal previously-undisclosed details of their capital and leverage positions in their forthcoming half-year results.

The demand has prompted concern from some lenders which are worried about the impact of such comprehensive public information disclosure at a time when the banking system continues to demonstrate signs of fragility.

It follows the ignition of a fresh row this week by Mr Cable, the Business Secretary, who said in a newspaper interview that the PRA's actions in enforcing new leverage rules - which dictate the level of banks' borrowings - risked inhibiting the economic recovery.

"One of the anxieties in the business community is that the so called 'capital Taliban' in the Bank of England are imposing restrictions which at this delicate stage of recovery actually make it more difficult for companies to operate and expand," he told the Financial Times.

The PRA's latest letter to banks is understood to set out new requirements relating to the disclosure of equity and regulatory capital, as well as banks' borrowings under the new Basel-III regulatory regime.

Mr Cable's broadside against the new regulator underlines the tensions within the Government about the need to make the banking system safer while not constraining lending capacity.

As previously announced, Barclays, which is the first of the major UK banks to report half-year results on Tuesday, is expected to say that it has reached a deal with the PRA that enables it to reach the required 3% leverage threshold by the end of 2014.

The PRA declined to comment.

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