Central banks have hammered out a deal to require banks to hold more capital.

The rules, agreed yesterday in Switzerland, form part of the new Basel III accord.

Banks will have to increase their core tier-one capital ratio to 4.5% and will also have to carry a further ‘counter-cyclical’ capital conservation buffer of 2.5%. Any bank that fails to meet the new requirements is likely to be prohibited from paying dividends to shareholders until it has improved its balance sheet.

However, the banks have been given longer to copy than was widely expected some will be given until January 2019.