British banks have been ordered to raise an additional £25 billion ($37 billion) in capital by the end of the year.
The Bank of England's (BoE) Financial Policy Committee (FPC) published a report today (27 March) in which it instructed an unnamed group of the country's major financiers to collectively improve the state of their balance sheets to protect them against potential future shocks.
According to the FPC, BoE officials decided at a meeting last week that lenders could face losses of around £50 billion over the course of the next three years due to charges relating to issues such as bad loans and regulatory penalties.
In order to meet the required capital boost of £25 billion before the end of 2013, the FPC recommended that banks should consider measures like reducing their bonus payments.
Furthermore, the panel indicated that shareholder dividends may also need to be cut sooner rather than later.
By Claire Archer