Resources for Basel II Capital Accord (Basel II)

UK banks to face greater disclosure on liquidity risk

www.financialnews-us.com

The UK financial services regulator today called for banks to adopt a "belt and braces" approach to ensure they were able to generate enough cash to meet payment obligations following troubles at mortgage lender Northern Rock.

The Financial Services Authority said in a discussion paper today it would raise banks' reporting requirements but take a more principles-based approach to regulating liquidity risk, which has taken center stage in UK Government financial policy discussions since the run on Northern Rock in September.

Thomas Huertas, acting managing director of wholesale markets at the FSA, said: "We recommend that banks take a belt and braces approach. The 'belt' is a comprehensive view of all the demands for funds that a bank could face as well as a plan to meet those demands. The 'braces' are a quantity of cash or assets that can be turned into cash at short notice even under stressed market conditions."

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