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UK to Ease Capital Requirements for Banks
July 8, 2026
– Vandit P
The Bank of England (BOE) plans to ease capital requirements for major UK lenders. The central bank said that it intends to remove or loosen certain post-2008 crisis rules that set the size of the financial cushion banks must hold to absorb losses. Among the proposals, the BOE’s financial policy committee plans to scrap a longstanding buffer within the leverage ratio. This change is expected to primarily benefit the largest UK domestic-focused banks and building societies, including NatWest, Lloyds, Nationwide and Santander UK. The proposals could reduce banks’ leverage ratios by 20bp on average, potentially spurring further lending to support the broader economy. The committee’s report noted concern that the proposal could trigger an unwanted rise in market-based leverage with implications for the resilience of core UK markets. The FPC will conduct a review, to be completed by the end of September, to determine whether the proposal creates financial stability gaps requiring further policy adjustments. The push toward lighter-touch regulation comes amid pressure on regulators to support growth.
Bonds of UK banks traded stable. For instance, Lloyds’ 6.75% Perp was at 102.7, yielding 6.1%
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