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By Huw Jones
LONDON, Nov 3 (Reuters) - Banks in Britain may face strictercapital requirements to counter relief given to banks in theimmediate aftermath of the June vote to leave the EuropeanUnion, a top Bank of England official said on Thursday.
The BoE said just after the vote, which sparked a sharp fallin sterling, it would allow banks to exclude central bankreserves from calculations of their broad measure of capitalknown as the leverage ratio.
This would give lenders more leeway to use central bankmoney to help them keep lending to the economy without facingextra capital requirements.
On Thursday, BoE Deputy Governor Jon Cunliffe said thisrelief could now be offset in part.
"We will offset this elsewhere to ensure that the overallstringency of the capital requirement is not weakened," Cunliffetold the annual dinner of AFME, a European banking industrybody.
The banking industry in London is drawing up contingencyplans to move some operations to the continent in the eventthere will be no unfettered access to the bloc's market afterBritain's departure from the European Union.
Cunliffe said that London as a financial centre had many"cluster" benefits from the proximity of banks, asset managersand ancillary services built up over many years.
It was conceivable that some activities could shift out ofLondon due to Brexit, Cunliffe said.
"It is in my view more likely that if they are lost inLondon they would be lost to Europe - for the foreseeable futureat the least."
Fragmentation of wholesale financial markets activity inEurope, to the extent it occurs, is likely to have a generalcost to European economies, including the United Kingdom, headded.
"And to the extent that the transition to whatever newarrangements will apply is not orderly and smooth, the costs andrisks will be greater," Cunliffe said.
(Reporting by Huw Jones; Editing by Chris Reese)
