Miscalculating the amount banks needed to pay out because of bad
behaviour is one of the reasons their balance sheets fall short
(Reuters)  Bank balance sheets are giving a misleading
impression of their capital adequacy meaning their capital
buffers are weaker than they should be to protect them, their
investors and their customers against collapse in any unforeseen
future financial disasters, according to the Bank of England's
Financial Policy Committee (FPC).  The FPC's latest financial
stability report said that understated potential future loan
losses, a shortfall in provision for payouts relating to bad
behaviour such as PPI mis-selling, and over-emphasis on the
impact of risk weights all raise doubts about the integrity of
bank balance sheet valuations.  "In combination, these factors
would imply that UK banks' capital buffers, available to cushion
losses and maintain the supply of credit following realisation
of a stress scenario, are not as great as headline regulatory
capital ratios imply," said the