Consumers have been warned that there would be no return to the era of cheap money after tough new regulations were drawn up to boost capital reserves held by banks.
Central bank bosses and regulators agreed rules which will force banks to more than double the spare cash they hold under new global regulations designed to prevent a repeat of the financial crisis.
The British Bankers' Association (BBA) said the agreement was likely to see banks hike the cost of credit for borrowers, already hit with a lending clampdown since the credit crunch.
But UK bank shares rose after news of the deal, with Britain's major players expected to emerge largely unscathed.
The new requirements will up the amount banks hold in common equity - the core Tier 1 ratio - from 2% to 4.5%, with a further "buffer" of 2.5%, bringing the total liquidity cushion to 7% of assets and liabilities.
However, the Financial Services Authority (FSA) has already introduced strict new rules on bank reserves since the 2008 meltdown and most UK banks now have core Tier 1 ratios of 9% or more.
Shares in RBS and Lloyds rose 3%, with Barclays stock up nearly 1%.
Eleonore Lamberty, a credit expert at ING Bank, said: "Currently the majority of European banks will have no problem to meet the new requirements.
"For the handful of banks that would find it more difficult, the very lengthy implementation period ensures that any capital shortfalls can be addressed, possibly through retained earnings."
The news spells bad news for consumers, according to Angela Knight, chief executive at the BBA. She said the move would end of the "cheap money era" as it becomes more expensive to run a bank, which will in turn be passed on to consumers through higher loan and mortgage costs.