Bank losses highlight flaws in FSA capital measures

With UK banks Lloyds Banking Group and Royal Bank of Scotland (RBS) confirming massive losses for 2008 last month, plans by the UK Financial Services Authority (FSA) to loosen bank capital requirements have come in for heavy criticism.

RBS, majority owned by the UK government, announced full-year losses of £24.1 billion on February 26. The following day, Lloyds reported a pre-tax loss of £10.8 billion at HBOS, the bank it took over in January. Of this, £6.7 billion resulted from impairment