Bigger banks are resisting tougher rules, says FSA

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The Financial Services Authority said feedback from banks on the Turner Review of the financial crisis showed "a number of larger firms" are against the idea of bigger capital buffers for systemically important banks — those deemed "too big to fail".

Such institutions complain their profits will suffer if they are forced to hold more cash on their balance sheet, which they could otherwise use to chase deals. The FSA's summary of responses to Lord Turner's recent report said: "Their view contrasted with other respondents, who were more in favour of tougher requirements, which were felt to be needed to guard against failure."

The watchdog indicated it plans to push ahead with the proposals to enforce tougher standards.

Banks also called on the regulator to take an "international approach" when looking at policy options. They felt any toughening up of capital requirements imposed by the UK alone could hit London's competitiveness.