Bank of England Eases Capital Rules to Aid Smaller UK Banks

The revised regulations aim to boost competition and resilience in the financial sector, providing relief to smaller lenders.

The Bank of England has scaled back its proposed capital requirements, reducing the increase from 3.2% to less than 1%.
Smaller banks will benefit from the ability to use internal models to calculate loan risk, making them more competitive in the mortgage market.
The changes are expected to reduce operational pressures and costs for smaller banks, allowing them to increase their market share.
The revised rules will also lower capital requirements for loans to SMEs and infrastructure projects, supporting economic growth.
The new regulations will come into effect in 2026, aligning with global Basel III standards and following extensive industry feedback.