British banks have reported strong capital and liquidity in the aftermath of the vote to leave the European Union, finance minister George Osborne said on Tuesday (July 5) after meeting in London with the heads of major banks and building societies.
“They report back that capital is strong, that liquidity’s strong, and we’ve got to make sure that that lending’s now available to businesses and families if they need it and they’ve assured me that it will be,” Osborne said.
“We’ve created a system whereby the next time we had a challenging economic environment our banks were part of the solution to the problem rather than the problem,” he added. “So the Bank of England has been able to free up additional lending capacity for the banks. That’s been a sensible step which has been very much welcomed by the banks today.”
The Bank of England has taken steps to ensure British banks can keep lending and insurers do not dump corporate bonds in the uncertain period following the UK’s shock vote to leave the European Union.
The central bank has said it would lower the amount of capital banks are required to hold in reserve, freeing up an extra 150 billion pounds for lending in a reversal of a decision it took earlier this year, when it started tightening screws on lenders because Britain’s economy appeared on course for more growth.
BoE Governor Mark Carney said the move represented a “major change” that would help the economy to weather the Brexit hit.
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