The changes include relaxed capital requirements for small businesses, mortgages, trade finance, and infrastructure loans. The PRA stated that these adjustments would result in a minimal impact on major banks’ capital thresholds, increasing them by less than 1%, significantly lower than the previously estimated 3%.

These revised plans are part of the Basel III regime, a set of reforms established in the wake of the 2008 financial crisis to strengthen the financial resilience of certain banks.

Sam Woods, deputy governor of prudential regulation and CEO of the PRA, emphasised that this modified package would “support growth and competitiveness while also ensuring that the UK aligns with international standards”.

The delay in implementation, initially planned for mid-2025, was attributed to the need to avoid excessive conservatism and ensure practical feasibility.

This move mirrors a similar decision by the Federal Reserve to reduce proposed capital requirement increases for major US banks, highlighting a global trend towards balancing financial stability with economic growth.