Lloyds Banking Group was in focus as traders studied forecasts of strong capital buffers last night. Deutsche Bank said that, on the basis of the Basel II banking capital rules, Lloyds’ buffer against unexpected losses – the so-called core tier one capital ratio – was on course to stand at 14.3 per cent in 2013. Crucially, even if the recently agreed Basel III norms are fully implemented, the bank is likely to boast about £10bn of surplus capital by that time. “We expect the bank to produce more capital than it can deploy, having to grow loans by 17 per cent more than we forecast in order to hold capital ratios flat after forecast dividends,”. Read more.
