PRA tells lenders to plug £27bn capital shortfall

Five of Britain’s biggest lenders must plug a combined £27.1 billion hole in their finances, with Barclays, Lloyds Banking Group and Royal Bank of Scotland accounting for more than 90 per cent of the shortfall, the City regulator said today.

The Prudential Regulation Authority (PRA) said Barclays needs to boost its balance sheet by £3bn, while state-backed lenders RBS and Lloyds must raise £13.6bn and £8.6bn respectively.

Nationwide building society is facing a £400 million shortfall, while The Co-operative must stump up £1.5bn as already announced.

HSBC, Standard Chartered and Santander UK do not need to bolster their capital cushions, the PRA said.

Santander UK’s chief financial officer, Stephen Jones, said: “We are pleased to note that the PRA board does not consider additional capital raising measures necessary for us.

“Santander UK has a robust internal stress testing programme and meets regularly with regulators to discuss capital plans.”

The watchdog said major banks and building societies need to hold capital reserves equivalent to 7 per cent of their risk-weighted assets by the end of this year.

In response, RBS said it “expects to continue to improve its core tier one capital ratio during 2013 through continued delivery against its established business plan”.

Lloyds said it expects to report a core tier one ratio of “above 9 per cent by the end of June 2013, six months ahead of its previous guidance, and approximately 10 per cent by the end of 2013, a year ahead of guidance”.

A spokesman for Barclays said the group was confident it will exceed the 7 per cent ratio by the end of 2013 “through our capital-generative businesses and continued progress in executing our ‘transform’ programme, including further capital-accretive disposals of legacy assets, which we have accelerated since the start of the year”.