Banking stocks in London were performing well on Wednesday afternoon, rebounding slightly after a political impasse in Italy hammered markets (especially cyclical stocks) the day before.RBS, Lloyds, Barclays and HSBC were in positive territory despite the news that the Financial Services Authority (FSA) is to ease capital rules for new banks in an attempt to aid competition and increase choice for consumers. The four lenders currently account for four fifths of High-Street deposits.According to FSA Chairman Adair Turner, the watchdog is to publish a report in the coming weeks which will say that new entrants to the banking market would not have to hold as much capital as their larger rivals to begin with. The new banks' core capital would have to equal at least 4.5% of their assets, compared with the 9-10% levels of capital that the more established lenders have to maintain due to their size. They would then be given time to build up to the 7.0% level required by Basel III standards.Barclays was making gains on reports that it could cut pay by around $890m over recent scandals that forced out high-profile board members, such as Chief Executive Bob Diamond.According to Reuters, the bank is to claw back around $680m from staff over its LIBOR-rigging scandal, as well as another $212m from past pay packages due to mis-selling products such as payment protection insurance (PPI).Investors were also choosing to build positions in RBS ahead of its full-year results on Thursday.Media reports over the past few days have suggested that the lender could announce plans for an initial public offering of its US retail arm Citizens, selling around 20-25% of the bank, amidst pressure from the government to bolster its capital position.Meanwhile, global bank HSBC received a boost by Investec which raised its recommendation for the stock from 'hold' to 'add' following a number of recent disposals."After 46 disposals/closures in two years with a wide array of balance sheet/income statement effects, [...] we see HSBC edging closer to its 12% return on equity target in 2013e." Top performing sectors so far todayIndustrial Engineering 9,299.46 +2.82%Mobile Telecommunications 3,844.78 +1.38%Technology Hardware & Equipment 1,148.85 +1.30%Life Insurance 5,417.22 +1.12%Banks 5,014.95 +1.01%Bottom performing sectors so far todayOil Equipment, Services & Distribution 23,606.82 -2.29%Real Estate Investment Trusts 2,212.61 -0.56%Beverages 14,468.28 -0.40%Food & Drug Retailers 4,406.07 -0.08%Tobacco 37,925.69 -0.03%BC