AFME Welcomes FPC Review of UK Bank Capital Requirements and Leverage Ratio Reform

AFME Welcomes FPC Review of UK Bank Capital Requirements and Leverage Ratio Reform

(IN BRIEF) AFME has welcomed the Financial Policy Committee’s review of UK bank capital requirements and its plans to consult on reforms to the leverage ratio and capital-buffer framework. The association supports removing the Countercyclical Leverage Buffer and is calling for broader simplification, closer international alignment and better treatment of areas where the leverage ratio may be overly restrictive, including the central bank exemption for UK broker-dealers. AFME also welcomed further work on making regulatory buffers more usable and clarifying the use of the PRA buffer.

(PRESS RELEASE) LONDON, 7-Jul-2026 — /EuropaWire/ — The Association for Financial Markets in Europe has welcomed the Financial Policy Committee’s latest update on its review of UK bank capital requirements, including proposed reforms to the leverage ratio and the usability of regulatory buffers.

AFME said the review offers an opportunity to improve the UK capital framework through reforms that support international alignment while allowing domestic changes to proceed without unnecessary delay.

Jeanie Watson, Director of Capital & Risk Management at AFME, said the association supports the FPC and Prudential Regulation Authority’s intention to pursue substantive reform of the current framework.

AFME welcomed the recognition that the leverage ratio requires further review. Originally designed as a backstop measure, the ratio has become more restrictive in practice, partly because of additional UK-specific requirements.

The association said that meaningful reform should go beyond limited adjustments and noted positively that the FPC and PRA plan to consult on a broader package of measures. AFME also welcomed the inclusion of its recommendation to remove the Countercyclical Leverage Buffer.

AFME said the wider leverage ratio review should focus on simplifying the framework, improving consistency with international standards and avoiding unintended competitive disadvantages for UK-based firms.

The association also called for further examination of areas where the leverage ratio may be set too conservatively. This includes ensuring that the central bank exemption operates effectively for broker-dealers based in the United Kingdom.

In addition, AFME welcomed plans to improve the usability of capital buffers and to consider industry requests for clearer guidance on how the PRA buffer can be used.

The organisation said it will review the announced measures in detail to assess their effect across different bank business models.

AFME added that a well-designed reform package could strengthen the United Kingdom’s appeal as an international financial centre while supporting the efficient provision of financing to households and businesses. The association said it looks forward to continuing engagement with the FPC and PRA through the forthcoming consultation process.

AFME Contacts:

Rebecca Hansford
Head of Communications and Marketing
Rebecca.Hansford@afme.eu
+44 (0)20 3828 2693

Notes:
1. The Association for Financial Markets in Europe (AFME) is the voice of the leading banks in Europe’s financial markets, providing expertise across a broad range of regulatory and capital markets issues. We represent over 150 leading global and European banks and other significant market players. Our members play a vital role in Europe’s financial ecosystem, underwriting around 90% of European corporate and sovereign debt, and 85% of European listed equity capital issuances. Importantly, AFME members are market makers, providing liquidity, which is essential for ensuring financial markets can function efficiently. We also represent law firms and other associate members which advise market participants and support AFME’s legal and regulatory initiatives. For more information please visit the AFME website: www.afme.eu

2. Follow us on X, formerly Twitter @AFME_EU

SOURCE: AFME