UPDATE 2-Bank of England snubs banks to press on with capital rule

* BoE policymakers reject bank lobbying on leverage curb

* Policymakers want leverage curb as soon as possible

* Debate over whether to publish bank stress test results (Adds Taylor on lobbying, stress tests,)

By Huw Jones and Christina Fincher

LONDON, July 2 (Reuters) - Bank of England policymakers saidon Tuesday they would press ahead quickly with a new curb onbanks' risk exposure and would not be deflected by industrylobbying against the plan.

Paul Tucker, the central bank's deputy governor forfinancial stability, told British lawmakers that the new rule,which would require UK banks to meet a limit on lending as aproportion of their capital, should be introduced now.

Ratcheting up the pressure on banks, Tucker said lobbyingwas "completely unacceptable", pointless and regulators wouldnot be deflected "one iota" from their tasks.

Some bankers have complained that demands they build upcapital levels run counter to calls from the government and theBank of England that they lend more in order to boost thecountry's slow economic recovery.

Andrew Bailey, another BoE deputy governor who is in chargeof prudential regulation, also said he wanted the rule in placeas soon as possible and that BoE staff were looking at planssubmitted by banks for how they could implement it.

"We have made clear that we will go through these with thepublic, with the institutions during the course of this month.And we will publish. We will make clear what the outcome of thatis," Bailey told parliament's Treasury Committee.

There had been "slippage" in the progress of British banksbuilding up their capital buffers, Bailey added.

Britain's Prudential Regulation Authority (PRA), whichBailey heads, said on June 20 that it would set a leverage ratioof 3 percent for UK banks, as required under Basel IIIinternational capital rules by January 2018, which would limitthe amount they can lend relative to their capital.

The leverage ratio measures capital against total loans andsome bankers argue the new plan would penalise low-risk,high-volume businesses like trade finance and mortgage lending.

The PRA has said that Barclays, one of Britain'sbiggest banks, has a leverage ratio of 2.5 percent afteradjustments, for example.

Nationwide bank also fell short while Britain's other majorlenders were at or above the 3 percent mark. Some UK lawmakershave pressed for a higher ratio and Bailey said 3 percent wasthe "minimum baseline".

The Federal Reserve said on Tuesday that it would propose aminimum leverage ratio of above 3 percent for U.S. banks.

FILLETTING

Some UK bankers have said they were surprised by thedecision to push for the new requirement now, nearly five yearsahead of an internationally agreed deadline.

Barclays warned on Friday it may have to cut lending if itis forced to act quickly to meet the new financial target.

But Martin Taylor, a member of the BoE's risk watchdog, theFinancial Policy Committee (FPC) and a former Barclays chiefexecutive, said there should be no surprise and that the habitof lobbying was not easy to break.

"I wouldn't have dared lobby government. The (BoE) governorwould have filleted me ... The reason why we are hearing thebanks squawking so loudly at the moment is that the PRA underAndrew Bailey is being effective," Taylor said.

Mervyn King, a few days before he stepped down as governorof the Bank of England, last week accused British banks oflobbying senior politicians to undermine the push for moreregulation.

Bailey said he had been reassured by the government that itconsidered the PRA to be independent as a bank supervisor.

"We are certainly aware that there are conversations thathappened between the banks and officials and ministers," hesaid. "The thing that concerns me is that we are trying tobuild, frankly, a transparent process that has accountability init."

The FPC has ordered annual stress tests of UK banks from2014 and Tuesday's grilling by lawmakers signalled there wasstill debate inside the committee over whether and to whatextent the results should be published. (Additional reporting by Li-mei Hoang, Adam Jourdan and SteveSlater; writing by William Schomberg; Editing by Susan Fenton)