The Bank of England (BOE) plans to increase capital requirements for British lenders by ￡11.4 billion (US$14.5 billion) to tackle risks posed by rapid growth in consumer credit and to prepare for the uncertain outcome of Brexit talks.
The central bank set the countercyclical capital buffer at 0.5 percent of risk-weighted assets for British loans effective in June next year, and if nothing material changes the it plans to increase the level again to 1 percent in November next year.
Additionally, next month regulators are to publish new guidelines for consumer lending to ensure risks are priced and managed appropriately.
“We want to move the levels of capital back up to the level they should be — any time you move into more benign credit conditions there have been fewer defaults,” which can lead to complacency, BOE Governor Mark Carney said yesterday.
Regarding Brexit, “there are risks around that process, so contingency planning needs to be not only put in place, but also activated,” he added.
Each increase of 0.5 percent is to swell banks’ cushion of common equity Tier 1, the highest-quality capital, by ￡5.7 billion, according to the central bank’s Financial Stability Report. It opted for a staggered approach because it is less likely to result in banks tightening lending in response.
“It is a sensible way for the bank to try to take some of the steam out of the consumer debt growth without immediately impacting the nominal rates paid by mortgage borrowers,” Edinburgh-based Baillie Gifford & Co investment manager Gregory Turnbull Schwartz said. “It’s more targeted than a general base rate hit and more easily reversed should they see the need to do that in the near term.”
The countercyclical capital buffer is meant to guard against banks’ tendency to boost lending in boom times and slash it in a bust, potentially exacerbating a slowdown. The regulation is meant to ensure banks have enough capital to weather losses and continue making loans to support the economy.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday said its materials management head, Vanessa Lee (李文如), had tendered her resignation for personal reasons. The personnel adjustment takes effect tomorrow, TSMC said in a statement. The latest development came one month after Lee reportedly took leave from the middle of last month. Cliff Hou (侯永清), senior vice president and deputy cochief operating officer, is to concurrently take on the role of head of the materials management division, which has been under his supervision, TSMC said. Lee, who joined TSMC in 2022, was appointed senior director of materials management and
Nvidia Corp CEO Jensen Huang (黃仁勳) on Thursday met with US President Donald Trump at the White House, days before a planned trip to China by the head of the world’s most valuable chipmaker, people familiar with the matter said. Details of what the two men discussed were not immediately available, and the people familiar with the meeting declined to elaborate on the agenda. Spokespeople for the White House had no immediate comment. Nvidia declined to comment. Nvidia’s CEO has been vocal about the need for US companies to access the world’s largest semiconductor market and is a frequent visitor to China.
Hypermarket chain Carrefour Taiwan and upscale supermarket chain Mia C’bon on Saturday announced the suspension of their partnership with Jkopay Co (街口支付), one of Taiwan’s largest digital payment providers, amid a lawsuit involving its parent company. Carrefour and Mia C’bon said they would notify customers once Jkopay services are reinstated. The two retailers joined an array of other firms in suspending their partnerships with Jkopay. On Friday night, popular beverage chain TP Tea (茶湯會) also suspended its use of the platform, urging customers to opt for alternative payment methods. Another drinks brand, Guiji (龜記), on Friday said that it is up to individual
STABLE RESULTS: Despite June’s lower consolidated revenue, second-quarter sales still reached a record high, driven by demand for chips for AI applications Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported consolidated sales of NT$263.71 billion (US$9.02 billion) for last month, its second-lowest monthly result this year. The world’s largest contract chipmaker said in a statement that its revenue last month only fared better than the NT$260.01 billion posted in February. Last month’s figure rose 26.9 percent from a year earlier, but slumped 17.7 percent from May, the company said. However, second-quarter revenue reached NT$933.8 billion, a record high for a single quarter, company data showed. The figure represented growth of 11.26 percent from the first quarter and 38.6 percent from a year earlier. Previously, TSMC said that
RSS