BoE Softens Capital Regime For Banks

(RTTNews) - The Bank of England said the capital threshold for major UK banks will be virtually unchanged, and delayed the implementation date for the new Basel standards by another six months as regulators bowed down to heavy lobbying.

The Prudential Regulation Authority estimated that the tier 1 capital requirements for major banks will increase by less than 1 percent from January 2030. This was a reduction from a 3 percent increase estimated previously.

The BoE backed the proposal to descope the Small Domestic Deposit Takers from the countercyclical capital buffer and capital conservation buffer.

The bank said the new Single Capital Buffer will simplify the capital regime for SDDT firms, while maintaining the level of resilience by keeping capital requirements and buffers.

Further, the PRA decided to move the implementation data for the Basel 3.1 standards by further six months to January 1, 2026.

PRA Deputy Governor Sam Woods said "These rules will improve the way in which we regulate the banks in order to maintain safety and soundness and wider financial stability."

Woods added that it will support growth and competitiveness, while ensuring that the UK aligns with international standards.

Ahead of a joint meeting with the Bank of England Governor Andrew Bailey and CEO's of the UK's largest banks and building societies, Chancellor of the Exchequer Rachel Reeves said today's proposals by the PRA mark the end of a long road after the 2008 financial crisis.

Reeves said, "These reforms will strengthen the resilience of our banking system and deliver the certainty banks need to finance investment and growth in the UK."