Banks in Britain will be subject to tighter rules on the definition of liquid assets, the Financial Services Authority confirmed yesterday.As with new rules outlined in recent months in New Zealand and Australia, only government bonds qualify as liquid assets.The actual level of liquid assets a bank must hold is a function of the bank's business model rather than spelled out in the FSA policy. On top of the narrower definition of liquid assets, other rules govern the adequacy of liquid resources, a requirement for more scrutiny of internal controls, and more detailed and frequent reporting requirements.National Australia Bank, which operates through Clydesdale Bank in Britain, might qualify for easier reporting requirements depending on the FSA view of its business model.Foreign bank branches will also be subject to much tighter rules, including tests of self-sufficiency to make sure that liquid assets within the branch do not leak out to support other arms of a bank at a time of stress.