LONDON The Bank of England (BOE) is pushing ahead with the rollout of revised new rules on how much capital UK banks must set aside to cope with future crises, as it juggles efforts to shock-proof lenders without hurting their global commercial interests.

In a speech published on Thursday, the regulatory arm of the central bank said it would make "substantial amendments" to earlier proposed Basel bank capital reforms in response to consultation feedback and evidence, which had highlighted "too much conservatism" and excessive costs or challenges to implementation.

"In terms of the capital impact, we think there will only be a very small impact on requirements, on average, across UK firms," Phil Evans, director of prudential policy, said in the speech.

"I should make totally clear right upfront that the adjustments we have made to get it right use UK data and are therefore applicable to the UK alone," Evans said, adding the changes were not in any way a comment on "the right approach" to implementing the Basel package for any other jurisdiction.

The Prudential Regulation Authority is planning to lower its proposed capital requirements for lending to small and medium-sized businesses (SMEs) for infrastructure projects. It also plans to streamline the approach banks can take to mortgage lending, chiefly by simplifying how they value residential property.

Taking into account its new proposals, the BOE's Evans estimates the impact of the new proposed changes will be less than 1% in aggregate on capital requirements phased in over four years.

"This is smaller than for our consultation proposals, and is clearly very small compared with the roughly 300% increase we needed over the decade from the global financial crisis to Covid. It is a smaller impact than in other major jurisdictions," Evans added.

Finance Minister Rachel Reeves welcomed the reforms, saying they would deliver certainty for the banking sector to "finance investment and growth in the UK".

Together with BOE Governor Andrew Bailey, Reeves is due to meet chief executives from across the banking industry later on Thursday to discuss the changes, which are due to  come into force on Jan 1, 2026.

"Today marks the end of a long road after the 2008 financial crisis," Reeves said in a statement.

"Britain's banks have a vital role to play in helping businesses to grow, getting infrastructure built and supporting ordinary peoples' finances."

  - Reuters