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The Bank of England is planning to ease capital rules for high street banks for the first time in a decade, marking the latest attempt to loosen regulations designed to protect the UK economy in the wake of the 2008 financial crisis.
The central bank has proposed lowering capital requirements related to risk weighted assets, by one percentage point to about 13%, reducing the amount lenders must hold in reserve. The move is designed to make it easier to lend to households and businesses.
The results of the 2025 Bank Capital Stress Test demonstrate that the UK banking system is able to continue to support the economy even if economic and financial conditions turn out to be materially worse than expected. This underscores the role of financial stability as a pre-condition for sustainable growth.
UK-focused banks – Lloyds Banking Group, Nationwide Building Society, NatWest Group and Santander UK Group Holdings plc were most affected by the UK macroeconomic stress, driven by higher interest rates, inflation, unemployment and house price falls.
Internationally-diversified banks – Barclays plc, HSBC Holdings plc and Standard Chartered plc faced additional pressures from global downturns and traded risk shocks in markets such as Hong Kong, China, the US and Europe.