(16 September 2024 – United Kingdom) The Bank of England (BoE) has walked away from a proposed capital increase for key trade financing products.
The about-face came after the BoE assessed convincing data indicating the plans were too conservative GTR reports. Major banks and trade finance providers campaigned against the mooted increase in capital requirements for trade finance because it would impair international enterprises because they may have to pay more for the products, which generally are short term revolving facilities that generate low margins for banks.
“We received convincing data regarding the calibration of certain trade finance related conversion factors, which demonstrated that our proposal of 50 percent was too conservative and not commensurate with the risk. So, we have followed the evidence” BoE Director of Prudential Policy Phil Evans stated.