On 2 December 2025, the Financial Policy Committee (FPC) published Financial Stability in Focus which provided an assessment of UK bank capital requirements.

Background

The FPC first assessed the appropriate level of capital requirements for the UK banking system in 2015, drawing on published analysis of the macroeconomic costs and benefits of capital by Bank of England (BoE) staff. The FPC has revisited its assessment of the appropriate capital requirements for the banking system from the perspective of the costs and benefits to growth.

Key findings

The FPC’s key findings in the Financial Stability in Focus include:

  • That the appropriate benchmark for the system-wide level of Tier 1 capital requirements is now 1 percentage point lower at around 13% of risk weighted assets (RWAs) – equivalent to a Common Equity Tier 1 (CET1) ratio of around 11%.
  • UK banks have tended to have capital headroom over regulatory minimum and buffer requirements. Currently, banks in aggregate have CET1 capital resources of about 2% of RWAs over their requirements, although such ‘capital headroom’ varies considerably across banks and over time.
  • The level of risk-based capital requirements for large banks in the UK is broadly similar to that in the euro area. And analysis that attempts to adjust for some key differences in the way risks are captured between the UK and US suggests that the level in the UK is lower than that in the US. That said, UK requirements appear to be higher than in other jurisdictions for some more specific aspects and cohorts, particularly leverage ratio requirements for large domestically focused banks.
  • The FPC will review the implementation of the leverage ratio in the UK, to ensure that it functions as intended. Within this, the FPC intends to prioritise reviewing the UK’s approach to regulatory buffers in leverage ratio requirements.

Next steps

The FPC and Prudential Regulation Authority are interested in the views of a broad range of stakeholders – including UK lenders, think-tanks, industry groups, investors, and academics – on the material covered in Financial Stability in Focus.

In early 2026, the BoE intends to organise structured evidence gathering sessions.

The FPC intends to provide a further update on this work in the next Financial Stability Report.