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UK banks fear economic hit from reforms - report

May 02 2010 22:23

LONDON, April 30 - British banks will warn that upcoming banking regulation could shave two percentage points off the country's economic growth, said Sky News, citing an unpublished report by PriceWaterhouseCoopers.

Forcing banks to keep more capital on their balance sheets would stymie bank lending and prevent credit flowing into the economy, the report said.

Sky said the unfinished PwC report was produced on behalf of banks including Barclays, HSBC and Royal Bank of Scotland.

It said the report looked at measures being proposed by the financial regulator, the Financial Services Authority, and at international level, but did not include the bank taxes recently proposed by the International Monetary Fund.

Sky said the banks and the British Bankers' Association had wanted to delay publication until after the UK's May 6 general election.

On the campaign trail, Prime Minister Gordon Brown told reporters: "We have got to reform the banks, the banks have got to serve the public.

"The recapitalisation of the banks and a proper system of remuneration and dealing with liquidity ratios is absolutely crucial to the future of British industry and the future of everybody who is a homeowner in this country."

Barclays earlier on Friday followed other banks in reporting a fall in bad debts as Britain and other economies pulled out of recession.

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