UK Banks Accuse Bank of England of Flawed Capital Comparison

Major UK banks including Barclays, HSBC, and Lloyds are pushing back against a Bank of England analysis that they claim misrepresents how their capital requirements compare to those faced by American competitors.

The Bank of England's Financial Policy Committee published its December 2025 capital review, which cut the benchmark for Tier 1 capital from 14% to around 13% of risk-weighted assets. This reduction marks the first decrease in a decade, reversing a threshold that had been in place since 2015.

The BoE's review also included cross-jurisdictional comparisons designed to show where UK requirements sit relative to other major banking systems, particularly the United States. However, the central bank's conclusion that simple cross-border comparisons are misleading without adjustments and that once adjusted, UK requirements do not look dramatically out of line with US rules has been disputed by the UK banks.

The banks argue that the BoE's adjusted figures actually understate how stringent UK requirements are relative to the US, not the other way around. The debate hinges on how risk-weighted assets are calculated in each country, with the UK and US applying different rules for calculating these weights.