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BoE FSR: Proposes the easing of some bank capital rules; the leverage ratio proposal would reduce the requirement by 20bps

Newsquawk Staff ·

  • When taking into account both regulatory requirements and the capital needed to remain above the leverage ratio hurdle rate in the Bank Capital Stress Test, the changes would reduce the leverage ratio that large UK banks subject to the leverage requirement need to maintain by around 20 basis points in aggregate, with the impact varying by bank.
  • To address these issues, the FPC and PRA intend to consult on a package of measures to make the leverage ratio framework more proportionate and more effective by being better targeted.
  • The FPC agreed to maintain the UK CCyB rate at 2% on 26 June 2026, unchanged from its 27 March 2026 meeting.
  • The proposed changes will help ensure the framework is simpler, more effective, more proportionate and better calibrated to the risks in today’s financial system, while ensuring that the system remains resilient so that it can support the economy when it needs it most.

Private Credit

  • Vulnerabilities in risky asset valuations, sovereign debt markets, and risky credit markets, including in private credit, previously highlighted by the FPC remain, and some have become more pronounced since the December 2025 Financial Stability Report.

Next Steps

  • Analysis on the proposed leverage framework to be completed by and considered at the Q3 FPC meeting.
  • "Separately, the FPC expects to update on its assessment of the interaction of capital requirements that are related to domestic exposures in the Q4 2026 FSR."

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