| LONDON, March 24
LONDON, March 24 The Bank of England is to
increase the fees it levies on the banks it regulates to meet
additional costs resulting from Britain's move to leave the
European Union - and may have to ask for more cash later on.
The central bank's Prudential Regulation Authority (PRA)
published a consultation paper on Friday on its annual funding
requirement (AFR) for the financial year starting in April.
The proposed total requirement is 266.5 million pounds
($332.8 million), up 9.2 million on the current year, a rise of
Brexit is expected to reshape Britain's financial markets,
Europe's biggest, given that banks based in London are likely to
lose their unfettered access to the bloc's single market.
Central bankers across the EU want to contain any threats to
financial stability, such as from ruptures in cross-border
"A new element of the PRA AFR is being proposed for 2017/18
for the recovery of certain costs associated with EU
withdrawal," the PRA said in its consultation paper.
The extra costs are due to its work on regulatory issues
concerning Brexit and reviewing current rules to ensure they
still work after withdrawal,.
"The PRA’s estimated costs associated with EU withdrawal
activity in 2017/18 are 5.4 million pounds."
Activity in relation to Brexit "will require a significant
amount of work to be undertaken by the PRA over a number of
And due to "uncertainty" surrounding the terms of
withdrawal, the PRA said it may have to ask for more money from
Other changes are also making demands on the PRA purse.
From 2019 banks in Britain must turn their retail arms into
legally separate units with their own capital buffers. The aim
is to shield customers and avoid taxpayer bailouts if a bank's
riskier investment operations go bust.
The PRA said it wants to increase its "ring-fencing
implementation fee" as supervisory costs are set to increase to
23.6 million pounds in the next financial year, compared with
7.9 million pounds this year.
It is also proposing a new fee to cover the 3.6
million-pound cost of implementing a new accounting standards
rule, known as IFRS9, which forces banks to recognise bad loans
in their provisioning far earlier than at present.
Banks in the past have been too slow in reserving for soured
loans, forcing taxpayers to bail out lenders during the 2007-09
financial crisis. From January they will have to set aside some
capital on the first day of the loan.
"Increasing levels of preparation work mean that it is now
appropriate to move to an implementation fee," the PRA said.
($1 = 0.8009 pounds)
(Editing by Greg Mahlich)