Global banks have been told they may have to slash bonuses and shareholder dividends to pay for "watershed" plans designed to stave off the prospect of more taxpayer rescues costing tens of billions of pounds.
The proposals are designed to shore up lenders' balance sheets so that governments will never again need to step in to save those deemed "too big to fail" - after the last crisis saw Britain pour £65 billion into the sector.
New rules set out by the Financial Stability Board (FSB), an international body chaired by Bank of England governor Mark Carney, could come into force from 2019. They will mean the 30 international banks deemed to be of global systemic importance having to build up loss-absorbing buffers on their balance sheets to up to a quarter of the value of the loans on their books.
These include Britain's HSBC, Barclays, state-backed Royal Bank of Scotland and Standard Chartered but not the other state-backed lender Lloyds Banking Group.
The FSB said the higher funding costs needed by the lenders as a result could be passed on to clients, prompting them to switch to other banks. But alternatively, it suggested "dividends and other distributions, such as employee remuneration, might fall".
Mr Carney said it was "a watershed in ending 'too big to fail' for banks".
"Once implemented, these agreements will play important roles in enabling globally systemic banks to be resolved without recourse to public subsidy and without disruption to the wider financial system," he added.
The FSB had been asked to draw up the proposals ahead of the forthcoming G20 summit in Brisbane. They aim to end the spectacle of governments having to step in to rescue big banks following the £45 billion used to rescue RBS and the £20 billion for Lloyds as they teetered on the brink of collapse in the last financial crisis.
RBS remains 80% owned by the state while the Treasury still holds a 25% chunk of Lloyds.
Mr Carney told BBC Radio 4's Today programme: "We are now in a position to finalise agreements that will substantially complete the job of fixing the fault lines that led to the crisis. We will move to a world where the largest, most complex banks can be resolved without the need for taxpayer support and without disruption to the wider system."
The FSB rules will set a basic requirement for banks to hold capital-equivalent buffers of 16-20% of so-called risk-weighted assets - that is, where the calculation takes account of the riskiness of loans. But added to other regulatory buffers the portion could be as high as 25%.
The FSB said that by strengthening the likelihood that taxpayers would not have to step in to save banks, the proposals would remove an "implicit public subsidy" that currently helps big lenders raise money in markets.
This would help establish a level playing field by removing a funding cost advantage and ensure they would have to compete on a more equal footing, the FSB said.
The proposals are expected to be finalised, following consultations, in time for the next G20 leaders' summit in 2015.
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