The Bank of England (BoE) has told building society Nationwide that it is not allowed to hold back lending to small and medium-sized businesses (SME) as it tries to meet the regulator's new capital rules.
The BoE last night reacted angrily to reports that Nationwide was delaying the launch of its small business banking arm, which should be launching this year, to 2016, according to the Daily Mail.
A BoE spokesman said: "The plan agreed with Nationwide to meet the 3% leverage ratio in 2015 will not result in them restricting lending to the real economy. Therefore it is wrong to blame their SME decision on the regulator."
A report by the Financial Times suggested that the building society was unlikely to launch a full SME service before the 2016 deadline for meeting the new leverage ratio.
It also suggested that tougher capital demands were not the only factor in Nationwide's decision to postpone the SME launch. The mutual was looking to improve its existing banking systems and infrastructure and boost its profitability before moving into this area and would only do so if market conditions were suitable, it said.
The Prudential Regulation Authority (PRA) last month accepted Nationwide's proposition to raise capital and mitigate business risks and granted it a two year extension to fulfill its capital requirements.
The regulator had asked banks to sort out their capital shortfalls in June after it identified a £27bn capital hole among eight major UK banks, with Nationwide falling £400,000 short.
An ambitious objective
'Something completely new'
'Illusion of control'
Reasons to be cheerful
Total investment reaches £9m