PRA Chief Warns Against Relaxing Bank Capital Rules amid Global risks
LONDON – Sam Woods, head of the Prudential Regulation Authority (PRA), cautioned against easing capital rules for UK banks, despite acknowledging a generally optimistic outlook for the sector. Speaking publicly, Woods highlighted a “dangerous place” in the global geopolitical landscape, citing relentless cyber attacks and the potential for disruption from poorly governed new technologies.
Woods expressed concern over vulnerabilities in the wider financial system, specifically pointing to “opaque and complex private lending by non-banks,” recent “cracks emerging in US credit,” and the potential for an “AI bubble.” He stressed that a resilient banking system and the profit motive can coexist, but only with appropriate safeguards.
The PRA chief’s comments come as Chancellor Rachel Reeves seeks a replacement for Woods, who is set to depart in June 2026, and is reportedly considering an “outsider” for the role. Reeves has publicly criticized existing regulation as a “boot on the neck of businesses,” and has challenged the PRA to support the government’s economic growth agenda – a pressure echoed by recent criticism from the fintech industry, which labelled banking watchdog regulation as “logic-defying” and “excessive.”
Despite these global headwinds, Woods indicated the UK banking sector has ”acclimatised” and is in a strong position, further suggesting the nation is now able to “admire the view from our position outside the EU and focus more on seizing the opportunities Brexit provides.”
