FSA proposes extra £32.6bn uk capital investment buffer for UK banks

British banks will be forced to hold up to £32.6bn in extra capital as a buffer against potential losses under new rules proposed by the financial watchdog.

The draft rules, published on Thursday by the Financial Services Authority, would also restrict what can be counted as capital.

The FSA has developed the proposals in the wake of changes to European Union regulations covering banks' balance sheets.

In a statement, the regulator said the proposals would improve the quality of capital held by businesses affected – mostly banks and building societies, along with some investment companies.

The rules would ensure UK banks met new EU-wide criteria on the eligibility of hybrid capital – capital with both debt and equity features – to count as part of their overall capital, the FSA said.

They would also strengthen capital requirements specifically for trading books, to ensure companies better accounted for the risk of possible losses from "adverse market movements in stressed conditions".

Companies affected would collectively have to hold up to an extra £29.6bn of capital against their trading books, and an extra £3.6bn against securitised products.

The changes amounted to an increase in the "absolute amount of capital held by UK capital investment banks of about 5pc, and a reduction of risk-weighted assets of about 4pc", the FSA said. The regulator will embark on a consultation programme until March, before the final rules are published later next year. They are due to come into force in January 2011.

A spokesman for the British Bankers' Association said the draft rules were in line with the industry's expectations following the development of new EU rules.

The proposed commencement date was ambitious as banks would need time to adjust their business models and potentially raise more capital, he said. The association is lobbying for the rules to come into force in 2012.

UK Capital Investments News, December 2009

Capital investment adequacy is a mutual headache for UK's building societies - UKCIG News

Back in February of last year, Adrian Coles, director general of the Building Societies Association, declared that his members were "definitely not" suffering the acute agony of the banks, a fate which I had predicted a few days previously.

Two years since, it's obvious who was right and who was wrong in that argument and yesterday saw further evidence of the ongoing problems the building society sector faces.

Yorkshire's willingness to consider absorbing the Chelsea Building Society is just one more rescue, albeit with a substantial capital restructuring as a condition. That said, it's not a done deal. Yorkshire is talking about a "possibility" of a merger and both sides' customers will vote. Such democracy is a far cry from the secret loans used by the Government to prop up HBOS while it merged with Lloyds TSB.

As with the banks, capital adequacy continues to be a headache at a time when the folding stuff is at a premium. Names such as Barnsley, Britannia, Chelsea, Cheshire, Derbyshire, Dunfermline, Scarborough and West Bromwich have all either been dismantled, rescued, recapitalised or merged since Coles made his assertion.

UK Car Insurers to Raise Rates as capital Investment Income Dwindles

U.K. car insurers will have to raise premiums by a further 5 percent to make up for lower investment returns this year, according to research by Deloitte LLP.

British auto insurers will likely make a 1 billion-pound ($1.7 billion) loss from insuring drivers this year and will have to raise prices to offset the cost of claims and dwindling investment income, the London-based management consultant said in a statement.

“Motor premiums are on the increase,” said James Rakow, insurance associate partner at Deloitte. “The current year of trading is far from being profitable at a market level and this is likely to remain the case in 2010.”

The car insurance industry hasn’t made an underwriting profit, which excludes investment income, for at least 11 years, the Association of British Insurers said. The Bank of England’s record low interest, which was cut to 0.5 percent in March, is squeezing the investment returns that buoyed insurers’ earnings for the past decade.

Aviva Plc and RSA Insurance Group Plc, the U.K.’s two biggest non-life insurers, said they succeeded in pushing through price increases in the first half of this year. In the market as a whole, motor insurers raised prices at the fastest rate on record in the three months to Sept. 30, and the average premium has risen 14 percent over the last year, according to the Automobile Association Ltd.

UK Capital Investments Group News, December 2009

UK Capital Investments adequacy is a mutual headache for UK's building societies group

Back in February of last year, Adrian Coles, director general of the Building Societies Association, declared that his members were "definitely not" suffering the acute agony of the banks, a fate which I had predicted a few days previously.

People have said that UK Capital Investments adequacy is a mutual headache for UK's building societies group.

Two years since, it's obvious who was right and who was wrong in that argument and yesterday saw further evidence of the ongoing problems the building society sector faces.

Yorkshire's willingness to consider absorbing the Chelsea Building Society is just one more rescue, albeit with a substantial capital restructuring as a condition. That said, it's not a done deal. Yorkshire is talking about a "possibility" of a merger and both sides' customers will vote. Such democracy is a far cry from the secret loans used by the Government to prop up HBOS while it merged with Lloyds TSB.

Lowestoft UK enterprise capital investments group

A seaside town where 5,000 new businesses have been set up in the past two years, creating almost 10,000 jobs, was named the enterprise capital of Britain.

Lowestoft in the East of England is said to have transformed itself from a town in decline hit by industrial downturns into a breeding ground for business growth.

The town, the most easterly in the country, ranks in the bottom 15 most deprived areas in the UK and beat off competition from London, Glasgow, Hull, Anfield in Liverpool, Merthyr Tydfil in south Wales, and Chatham in Kent to win the Government-run award.

Thanks to funding from the local enterprise agency NWES, the first centre for performing arts opened and money was invested in renewable energy.

Scott Cain, deputy chief executive of Enterprise UK, said: "Lowestoft and specifically NWES has demonstrated outstanding vision and drive to become this year's Enterprising Britain winner. It's an inspiring story of inspiring people coming together to change lives."

Trade, Investment and Small Business Minister Lord Davies said: "Enterprise remains the engine room of our economy, with 4.8 million businesses last year contributing more than 50% to the UK's turnover.

"NWES has turned a deprived seaside town into a community that is no longer dependent on a few major employers. In these tough economic times it has established a strong enterprise culture in the region, supporting growing businesses and creating jobs.

"In the current economic climate, we must continue to place enterprise at the heart of our businesses and communities."

UK Capital Investments Group News, December 2009

UK Treasury says no probe into capital investment bank profit - UKCIG

Lord Myners to speak on bank profits in Dec. -Treasury

* No investigation under way

British financial services minister Lord Myners will voice concerns over bumper investment banking profits in a speech in December, but no investigation of the sector is under way, a Treasury spokesman said.

"Lord Myners intends to delve further into these issues in a speech early next month," the spokesman said.

"There isn't a formal investigation."

The Sunday Times newspaper reported that Myners had launched a probe into whether recent hefty investment banking profits had been facilitated by the billions of pounds of public money pumped into the financial system.

HSBC, Britain's biggest lender, in August reported that its investment banking profits rose by 130 percent in the first half of the year, while rival Barclays (BARC.L) said its investment banking profit doubled.

Investment banks pay out a high proportion of their profits in the form of staff bonuses, a practice which critics say fuelled a culture of excessive risk-taking which contributed to the credit crunch and subsequent banking crisis. (Reporting by Myles Neligan; Editing by Mike Nesbit) ((myles.neligan@reuters.com; +44 207 542 13 73))

UKCIG News, from Reuters, November 2009

Macquarie rolls out first structured product for UK Capital Investments

Macquarie Funds Group has launched its first structured product, dubbed the Macquarie Global Infrastructure Growth plan, into the UK capital investments market.

The asset management arm of Australia-based Macquarie Group said it added the plan to its existing managed funds range to provide UK investors with the potential for defensive long-term capital growth and annual income combined with partial capital protection.

According to Macquarie, the plan provides investors with the opportunity to diversify their portfolio by gaining exposure to the global infrastructure sector.

The company said exposure to the sector could be relevant for investors focusing on long-term wealth planning, diversification, inflation protection and defensive investing.

The Global Infrastructure Growth plan is open for investment until December 17.

Investors will have the opportunity to benefit from any increase in the level of the S&P Global Infrastructure index.

Philipp Graf, head of the UK investment solutions and sales team at Macquarie, said: "Given the essential nature of infrastructure, demand for its creation and maintenance continues to rise.

"Investors have recognised this opportunity, and infrastructure is now an established asset class globally."

Mr Graf said Macquarie was offering UK capital investments investors "tailored access" to the asset class through the new plan.

"The payoff profile of the Macquarie Global Infrastructure Growth plan has been specifically designed to reflect the underlying characteristics of infrastructure assets represented in the S&P Global Infrastructure index," he said.

"The plan will enable investors to add infrastructure exposure to their portfolios for diversification and long-term wealth planning purposes."




UK Capital Investments News, November 2009