LONDON, March 27 (Reuters) - Britain's banks must raise 25billion pounds in extra capital to absorb possible future lossesand sustain lending, the Bank of England's Financial PolicyCommittee said on Wednesday.
The FPC, tasked with spotting system-wide risks, said banks'immediate objective should be to achieve a core tier 1 capitalratio, based on Basel III definitions, of at least 7 percent oftheir risk-weighted assets by the end of 2013.
Some banks already have the necessary capital to meet therequirements but "for those that do not, the aggregate capitalshortfall at end 2012 was around 25 billion pounds", the FPCsaid in a statement.
The statement did not name individual banks.
The FPC said banks and building societies with shortfallsshould issue new capital or restructure their balance sheets ina way that doesn't hinder lending to the UK economy.
Britain's banking supervisor Andrew Bailey has been checkinghow banks calculate risks on their books to determine overallcapital requirements.
He has previously expressed concern about inadequateprovisions for losses on loans.
All four of Britain's biggest banks have been hit with finestotaling more than 14 billion pounds so far for mis-selling loaninsurance.
Most attention has focused on Royal Bank of Scotland and Lloyds, in which the government has stakes it hopesto sell by the next election in 2015. Replenishing capitalbuffers is an important step in making them marketable.
UK lawmakers are also putting pressure on regulators toincrease competition in a sector where four banks, Lloyds, RBS,HSBC and Barclays hold 74 percent of deposits.