Bank of England eases capital requirements for midsize banks

Britain's central bank lightened the capital requirements for medium-sized banks on Tuesday, as part of a wider set of reforms aimed at boosting the country's financial sector.

The Bank of England increased the minimum asset threshold at which banks have to issue expensive debt known as MREL, so that they can be bailed in if they fail instead of needing taxpayer rescue as happened in the 2008 financial crisis.

The BOE set the threshold at 25 billion-40 billion pounds ($87.35 billion), up from a previous 15 billion-25 billion pounds and slightly more generous than the 20 billion-30 billion pound range it had proposed when launching a consultation on the measures last year.

The BOE said it will decide on which resolution method is appropriate for banks within that band on a case-by-case basis, while banks above 40 billion pounds in assets should expect to have to set up a bail-in plan.

Britain's mid-sized lenders have for years argued that regulations put in place after the crisis to safeguard banks were disproportionately punitive on them, and argued for easing of rules such as MREL.

The country's Labour government meanwhile has called on regulators to look for ways to boost the economy and the financial sector, shifting the risk-averse mindset that has prevailed since 2008 to one more focused on growth.

Banks most likely to benefit from the easing of MREL requirements include OneSavingsBank OSB and Metro Bank MTRO, Benjamin Toms, analyst at RBC Europe, said in a research note prior to the announcement on Tuesday.

($1 = 0.7442 pounds)