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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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Extent of 'banking black hole' to be revealed

Banks are still heavily weighed down by the costs of what went wrong during the crash. Credit: Ian West/PA Wire/Press Association Images

The Bank of England's new Financial Policy Committee is set to announce the extent of the missing billions from the UK banking sector.

The ‘banking black hole’ is made up of toxic loans that the banks will never see repaid, underestimates of how much compensation banks will have to pay for past mistakes, or costs not yet fully understood from new rules and regulations.

At the end of December 2012, the Governor of the Bank of England suggested the banking black hole was as big as £60 billion - almost as much as the bail-outs for RBS and Lloyds.

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