UPDATE 1-BoE adjusts capital rules for global banks with UK retail arms

* BoE amends rules to better fit global banks

* Vickers says BoE sticking to "soft" policy on capital (Adds comment from Vickers comment)

By Huw Jones and William Schomberg

LONDON, May 26 (Reuters) - UK banks which have a globalfootprint and big domestic retail operation might have to setaside a slightly bigger capital buffer against lending risksfrom 2019, the Bank of England said on Thursday.

The BoE, which is seeking to prevent a repeat of the 2007-09financial crisis when problems in the banking system hammeredthe global economy, has published a final set of rules on howmuch extra capital banks wrap around their retail arms.

All deposit-taking banks with assets of 175 billion pounds($257 billion) or more will be required to "ring-fence"themselves with an additional "systemic risk" capital buffer.

But after consultations, the Bank tweaked the final rulespublished on Thursday to reflect how three British lenders -HSBC, RBS and Barclays - have separateglobal capital requirements to comply with as well.

The amendment will mainly affect RBS because under itscurrent structure it has a large UK retail arm while its globalcapital requirements are relatively low.

The change ensures that global banks hold enough capital toabsorb any losses at their international and ring-fenced retailarms but without costly duplication.

The BoE has set a target for the UK banking system as awhole to hold a capital buffer equivalent to 13.5 percent ofrisk-weighted assets, a level that has already been largelyreached.

The BoE's Financial Policy Committee said the impact of theamendment for global banks would be "very small at present".

The FPC made no other changes to proposals it put out topublic consultation, brushing aside calls from John Vickers whochaired the Independent Commission on Banking's inquiry into theshortcomings of the banking system following the financialcrisis.

Vickers has accused the BoE of weakening the commission'srecommendations for strengthening capital requirements, andwants a far higher systemic risk buffer than the maximum 3percent of risk-weighted assets proposed under the BoE's finalrules.

"It's disappointing that the BoE has stuck to its softpolicy on bank capital. Parliament gave the BoE scope tostrengthen capital requirements a good deal further but it hasfallen short," Vickers said in a statement.

BoE officials say that overall their capital rules arelargely in line with what the commission wanted. Capital alreadyset aside by British banks is 2.5 times the size of lossesracked up by RBS or HBOS, the two banks rescued by taxpayers inthe financial crisis, the officials say.($1 = 0.6814 pounds) (Editing by Greg Mahlich)