§ Mr FraserTo ask the Secretary of State for the Environment what consultations took place between his Department and the Bank of England prior to the directive by the Bank to banks in the United Kingdom to increase the risk factor attributed to secured loans to housing associations to 50 per cent.; and how much the directive will add to the borrowing costs of housing associations.
§ Mr. YeoI understand that no such directive has been issued.
Capital adequacy requirements were issued by the Bank of England in a notice sent to all banks in October 1988. The notice identified certain lending to housing associations as an activity attracting a concessionary weighting of 50 per cent in the ratio of capital against assets. A further notice was issued in December 1990 clarifying and slightly widening the circumstances in which lending to housing associations could qualify for this concessionary weighting.