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Bank sector's £25bn 'black hole'

The banking sector has to fill a £25 billion "black hole" in its reserve funds that are needed as a cushion against future crises, the Bank of England has warned.

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Cable: Banks £25bn 'black hole' filler plan is wrong

The Business Secretary Vince Cable has attacked the Bank of England's plans for Britain's banks to raise up to £25bn to strengthen their balance sheets.

In an interview with Sky News, he said: "The idea that banks should be forced to raise new capital during a period of recession is an erroneous one.

Vince Cable said the plan would slow the pace of the UK's economic recovery Credit: Stefan Rousseau/PA Wire

He warned that the ruling by the Financial Policy Committee will "prolong the time it takes for the British economy to recover by further depressing already-weak SME lending".

"I believe the weight of the argument is in favour of counter-, not pro-cyclical, lending measures, and I rather suspect that the new Governor of the Bank of England shares this view, he added.

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