Britain's banking regulator has relaxed a new rule determining the quality of assets banks must hold to cover risks from pension liabilities.

The Bank of England's Prudential Regulation Authority (PRA) had proposed that all the extra capital which comes on top of mandatory minimum buffers, should eventually be in the most expensive form, such as shares or retained earnings.

The PRA said yesterday that "in light of consultation responses" at least 56 per cent of the supplementary capital to cover mainly pension risks should be in top quality assets, and not all of it over time, as originally proposed.

But the new rule will come into force on January 1, 2015, a year earlier than proposed.

Shares in Barclays rose more than 2 per cent following the announcement, with many of the other top UK banks also rising.

Banks currently meet the requirements to cover pension risks with any form of regulatory capital, and the original proposal from the PRA raised hackles at banks already facing heavy core capital demands.

Banks had also challenged the inclusion of pension risk in the capital rule but the PRA has rejected their arguments.

"These decisions will enhance the stability of the financial sector and strengthen the capital regime in the UK," the PRA said.

"Although the PRA has not finalised all aspects of the rules, it is setting out a number of key decisions to give firms clarity on the key policy issues that affect the minimum level of common equity tier 1 (CET1) capital which firms need to maintain," the PRA said.

The PRA said eight major lenders and building societies must hold a core capital buffer equivalent to 7pc of their risk-weighted assets from January 2014.

They are: Barclays, Co-operative Bank, HSBC, Lloyds, Nationwide, Royal Bank of Scotland, Santander UK and Standard Chartered.

The eight must comply with a leverage ratio of three per cent from the same date. This is a measure of capital in proportion to a bank's total assets on a non-risk weighted basis.-Reuters