Bank of England Eyes Regulatory Overhaul to Spur UK Banking Growth
London, UK – [Date] – The Bank of England is poised to unveil meaningful regulatory reforms on tuesday, aiming to stimulate growth within the UK’s banking sector.These changes, especially concerning the Minimum requirement for Own Funds and Eligible Liabilities (MREL), are expected to ease burdens on lenders and enhance the UK’s competitiveness as a financial hub.
The proposed adjustments to MREL, which currently impose strict requirements on banks wiht assets between £15bn and £25bn to ensure their orderly resolution in crises without taxpayer intervention, are a key focus. The Bank of England initiated a consultation in late 2024, suggesting an increase in this asset threshold to £20bn-£30bn.
These reforms come amidst ongoing discussions about the broader regulatory landscape for UK banks. Earlier this year,Shadow Chancellor Rachel Reeves faced calls to dismantle the ring-fencing regime,a system that mandates the separation of retail and investment banking operations for major lenders. Scrapping ring-fencing could potentially save institutions like Natwest an estimated £530m.
In a recent address, Bank of England Executive Director Sarah John emphasized the critical need for “further regulatory reform.” While acknowledging the importance of robust regulation, John highlighted the opportune moment to recalibrate the UK’s regulatory approach, ensuring it effectively balances financial stability and consumer protection with the imperative of economic growth. She noted that ther is “scope to remove both duplication and complexity and to ensure the UK remains competitive, including in its implementation of capital rules.”
John underscored the tangible impact of these regulatory shifts, stating that while they may appear “technical and abstract,” they have a “real impact on lending to businesses and how the UK is perceived as a place to do business and to invest.” The anticipated changes to MREL are seen as a crucial step in this direction, signaling a commitment to fostering a more dynamic and growth-oriented banking environment in the United Kingdom.
