De-leveraging is Holding Back Growth

De-leveraging is Holding Back Growth

Nationwide, the UK’s biggest building society has decided to put its SME lending plans on hold as the company has been forced to increase its capital buffer by regulators.

Once again, regulation strikes, holding back growth in the banking sector and making the economic situation worse by drawing money out of the economy at a time when liquidity is most needed.

According to the Financial Times:

The mutual, which had planned to begin lending to small businesses this year, faces demands to bolster its leverage ratio – which measures its capital as a percentage of its assets – to 3% by the end of 2015.

Nationwide is now expected to begin its SME lending during 2016.

The UK’s Business Secretary, Vince Cable, summed these nonsensical capital demands:

“One of the anxieties in the business community is that the so-called ’capital Taliban’ in the Bank of England are imposing restrictions which at this delicate stage of recovery actually make it more difficult for companies to operate and expand.”

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