LONDON, July 29 (Reuters) - The Bank of England is revampinghow it requires banks to hold capital above the mandatoryminimum requirements in order to be more transparent and bettertailored to the risks covered.
The BoE's Prudential Regulation Authority, which supervisesbanks, said in a statement it was creating a new "PRA buffer"that will be held by banks to absorb losses that may arise undera severe, but plausible stress.
Where the PRA assesses a firm's risk management andgovernance to be significantly weak it may also set the PRAbuffer to cover the risk posed by those weaknesses until theyare addressed.
"Firms must hold adequate capital to support the risks intheir business, ensuring financial stability and continuity inthe provision of key services to the wider economy," PRA ChiefExecutive, Andrew Bailey, said in a statement on Wednesday. (Reporting by Huw Jones, editing by Carolyn Cohn)