Nationwide update over changes to UK legal restrictions | Personal Finance | Finance
Key changes to UK banking restrictions could affect Nationwide Building Society and other providers. A top banking regulator gave an update about the issue to MPs.
Katharine Braddick spoke to the Treasury Committee about the oversight of the banking industry. She was speaking to the MPs as she had been appointed as the new deputy governor for prudential regulation at the Bank of England and the chief executive of the Prudential Regulation Authority.
She will take on the role in June 2026. One question she was asked by the committee was about the leverage ratio buffers that restrict the dealings of building socities such as Nationwide.
The question was posed after the Building Societies Association previously told the MPs that reforming these capital limits could open up the sector.
Needless red tape
Sarah Harrison, chief executive of the association, told the committee previously: “At the moment, in the UK we have certain requirements in the prudential regulatory space, to require capital to be retained, often as a ratio of capital to assets, for good prudential reasons. Normally, the levels are set internationally but in the UK we’ve added a UK requirement, which is known as the leverage ratio buffer.”
The purpose of these constraints is to ensure that lenders keep sufficient funds available so they can maintain their operations if their investments or loan repayments fail. Ms Harrison warned: “In practice, what that means is some of the obligation on some of our building society members is to hold a lot more capital than is necessarily reflective of their risk portfolio.”
She said that Nationwide had informed her that without the buffer, the group could potentially free up an extra £30billion in capital to go towards business or mortgage lending.
Unlocking more services
Asked for her thoughts on the issue, Ms Braddick was reluctant to commit to anything in her answer. She told the committee: “If you do not mind, I will resist being drawn on that question until I am in role and have access to better technical information.”
Nationwide was previously asked for its view on whether these capital rules should be relaxed. A spokesperson said: “Reducing leverage buffers would support additional lending to both individuals, via mortgage lending, and SMEs, through business loans.
“With the Government’s ambition to double the size of the mutuals sector, leverage ratio reform would support the sector’s growth potential, where current leverage requirements can often constrain further lending activity for lower risk providers.”
