BoE's King says UK banks don't need more public money

LONDON, March 27 (Reuters) - The Bank of England said onWednesday that its recommendations for Britain's banks to plug a25 billion-pound capital shortfall by December won't call onfurther taxpayer funds.

"The meeting of these recommendations does not requireadditional public funds. Banks can meet the recommendations inother ways such as through restructuring," Mervyn King said in astatement.

BoE Deputy Governor Andrew Bailey, who also heads Britain'snew Prudential Regulation Authority, said around half of theshortfall was covered in plans the banks have already drawn up.

"We are not saying that those plans are absolutely baked in,and have been given a seal of approval. They will be scrutinisedby the PRA. But if you add the numbers up that is where you getto," Bailey said.

King dismissed criticism that fresh pressure on banks toraise capital will hinder lending to the sluggish economy.

"Far from reducing lending, today's recommendations willsupport lending and promote growth. A weak banking system doesnot expand lending," King said.

"The better capitalised banks are the ones expandinglending, and it is the weaker capitalised banks that arecontracting lending," King added.