Bank of England snubs banks to press on with capital rule By Huw Jones and Christina Fincher LONDON (Reuters) - Bank of England policymakers said on Tuesday they would press ahead quickly with a new curb on banks' risk exposure and would not be deflected by industry lobbying against the plan. Paul Tucker, the central bank's deputy governor for financial stability, told British lawmakers that the new rule, which would require UK banks to meet a limit on lending as a proportion of their capital, should be introduced now. Ratcheting up the pressure on banks, Tucker said lobbying was "completely unacceptable," pointless and regulators would not be deflected "one iota" from their tasks. Some bankers have complained that demands they build up capital levels run counter to calls from the government and the Bank of England that they lend more in order to boost the country's slow economic recovery. Andrew Bailey, another BoE deputy governor who is in charge of prudential regulation, also said he wanted the rule in place as soon as possible and that BoE staff were looking at plans submitted by banks for how they could implement it. We have made clear that we will go through these with the public, with the institutions during the course of this month. And we will publish. We will make clear what the outcome of that is," Bailey told parliament's Treasury Committee. There had been "slippage" in the progress of British banks building up their capital buffers, Bailey added. Britain's Prudential Regulation Authority (PRA), which Bailey heads, said on June 20 that it would set a leverage ratio of 3 percent for UK banks, as required under Basel III international capital rules by January 2018, which would limit the amount they can lend relative to their capital. The leverage ratio measures capital against total loans and some bankers argue the new plan would penalize low-risk, high-volume businesses like trade finance and mortgage lending. The PRA has said that Barclays (BARC.L), one of Britain's biggest banks, has a leverage ratio of 2.5 percent after adjustments, for example. Nationwide bank also fell short while Britain's other major lenders were at or above the 3 percent mark. Some UK lawmakers have pressed for a higher ratio and Bailey said 3 percent was the "minimum baseline." The Federal Reserve said on Tuesday that it would propose a minimum leverage ratio of above 3 percent for U.S. banks. Some UK bankers have said they were surprised by the decision to push for the new requirement now, nearly five years ahead of an internationally agreed deadline. Barclays warned on Friday it may have to cut lending if it is forced to act quickly to meet the new financial target. But Martin Taylor, a member of the BoE's risk watchdog, the Financial Policy Committee (FPC) and a former Barclays chief executive, said there should be no surprise and that the habit of lobbying was not easy to break. I wouldn't have dared lobby government. The (BoE) governor would have filleted me ... The reason why we are hearing the banks squawking so loudly at the moment is that the PRA under Andrew Bailey is being effective," Taylor said. Mervyn King, a few days before he stepped down as governor of the Bank of England, last week accused British banks of lobbying senior politicians to undermine the push for more regulation. Bailey said he had been reassured by the government that it considered the PRA to be independent as a bank supervisor. "We are certainly aware that there are conversations that happened between the banks and officials and ministers," he said. The thing that concerns me is that we are trying to build, frankly, a transparent process that has accountability in it. The FPC has ordered annual stress tests of UK banks from 2014 and Tuesday's grilling by lawmakers signaled there was still debate inside the committee over whether and to what extent the results should be published. Additional reporting by Li-mei Hoang, Adam Jourdan and Steve Slater; writing by William Schomberg; Editing by Susan Fenton