New capital requirements on banks risk restricting lending and making the UK's financial institutions less attractive to investors if they are over-capitalised, one of the UK's top bankers has warned.

If banks hold too much capital to meet new regulatory standards it will reduce their capacity to lend, and in extreme cases where banks became over-capitalised, would reduce competitiveness and make them unattractive to investors, according to Marcus Agius, group chairman of Barclays and chairman of the British Bankers' Association (BBA).

"it is critical to appreciate that banks can never be risk free," Agius told an audience at the BBA banking conference in London.

"A risk free bank is an oxymoron. I do have a concern that some regulators believe more capital is the solution to every problem, and there is a risk that this will be taken too far. The extreme banks will be over-capitalised, which would make them unattractive to: Read more on this story: Credit Today online

(Source: Credittodayonline)