LONDON (Reuters) – Jon Cunliffe, deputy governor of the Bank of England, said he hoped a new requirement for lenders to hold more capital would dampen signs of a “bit of exuberance” in credit card and personal lending to British consumers.
The Bank of England said last month that lenders had underestimated the risks from a surge in consumer borrowing, and they needed to hold an extra 10 billion pounds of capital to guard against future dangers.
Cunliffe said on Sunday that banks were being over-optimistic in estimating the likely losses from credit card and personal loan debt because they were confusing good economic conditions with the credit quality of the actual borrowers.
“People were letting standards slip,” he said in an interview in the Mail on Sunday. “You’re starting to see it maybe a little bit more in mortgage terms. I think and hope this will slow this market down. But if it doesn’t we may have to do more.”