This is the accepted version of the paper.This version of the publication may differ from the final published version. ABSTRACT After the collapse of a number of banking institutions and bailouts of banks by governments, regulators have taken a different attitude and now appear keen to take regulation seriously when it comes to ensuring that banks have adequate capital and sufficient liquidity. Not only that, but in the United Kingdom, the Independent Commission on Banking Reform has made proposals with regard to the capital position of banks. This article, which is an overview, will look at matters from a UK perspective and at the proposals for reform. This article, after its introduction and summary, will look at a number of areas: first, the reforms made by Basel III; second, the regulation of Systemically Important Financial Institutions (Sifis) and the proposals for dealing with these; third, some matters in relation to lending that relate to capital and liquidity generally; fourth, increased stress testing of banks; fifth, derivatives and risk taking and the new proposed structure of regulation in the United Kingdom; sixth, the war of spin between regulators and banks; seventh, Shadow Banking; and eighth, The Independent Commission on Banking Reform and its proposals for reform. It will also be a theme that the various proposals lack consistency and that this could lead to regulatory arbitrage. It is already clear that there are inconsistencies between the various regulatory organisations, with proposals in the United Kingdom indicating that banks will be required to keep much higher levels of capital than those proposed by Basel and the European Community. The views of those who have pointed out inconsistencies between the United Kingdom and Basel/Europe have been highlighted. Permanent repository link

This is the accepted version of the paper.This version of the publication may differ from the final published version. Permanent repository link

No abstract

The new Equator Principles (EP2) now require lending banks that have signed up to EP2, and also the borrower, to take account of the social rights of affected communities as provided by the rules in EP2. However, there continue to be criticisms by NGOs of individual EP2 banks, in particular, relating to the monitoring by the banks of the covenants entered into by the borrower. There are also ongoing concerns by NGOs as to the transparency of certain actions of individual EP2 banks, with allegations that some banks are not complying with the provisions in EP2. A statutory system of regulation might address these issues, although such a system is unlikely to be introduced on a worldwide basis. It is also unclear whether a statutory system would provide better protection for affected communities. EP2 requires affected communities to be consulted, but the affected community is not required to agree to the project in order for it to go ahead. It is suggested that this is a fundamental weakness of EP2: the balance is tilted so as to enable such projects to be carried out even if the affected community does not want the particular project to take place.

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