Bank of England Revises Capital Rules for UK Banks
The Bank of England has revised its capital rules, reducing the required increase in capital buffers for UK banks to less than 1%, which is expected to benefit smaller lenders and enhance competition in the mortgage market. The changes will take effect in 2026 and were influenced by significant lobbying from the banking sector.
| Score | Value |
|---|---|
Scale | 7 |
Novelty | 6 |
Positivity | 4 |
Reliability | 8 |
Actionability | 3 |
Society | 6 |
Journalism | 5 |
Highlights
- The Bank of England has revised capital rules for UK banks, reducing the required increase in capital buffers to less than 1%.
- The changes are aimed at supporting smaller lenders and enhancing competition in the UK mortgage market.
- The UK's mortgage market is dominated by a few large banks, which hold a combined market share of 71.6%.
- The revised rules will come into effect in 2026, ahead of a global deadline of 2030.
- The changes were influenced by extensive lobbying from the banking sector, with over 70 meetings held with Bank of England officials.
Perspectives
- The Labour government views the revised capital rules as a means to bolster economic growth, allowing banks to better support businesses and infrastructure projects. [2]
- Some analysts express concern that the relaxation of capital requirements may undermine the resilience of the banking system, potentially increasing risks of financial instability. [2]