FSA cracks down on commercial property lending

The move by the FSA is part of a global effort to prevent banks from understating the risks on their balance sheets to boost their capital position, according to the Financial Times. The regulator has ordered banks to improve the way their internal models measure risk or switch to more standardised calculations. While the industry is still negotiating with the regulator on the changes, bankers expect to have to hold more capital against their real estate portfolios. They are likely to respond by charging more for loans or cutting back lending. The Basel Committee on Banking Supervi...