Sir Mervyn King warns of further banking losses

The UK and other major economies will remain weak until banks have sufficient capital to absorb "likely" future losses from bad loans, the governor of the Bank of England has warned.

Speaking at an event in Cardiff, Sir Mervyn King said this was because the banks' current "insufficient capital" was continuing to deter them from lending to households and firms.

He added that banks needed to accept that further bad debts were expected.