Nationwide update over ‘additional’ services for customers

A senior banking industry leader spoke about major changes to the law

Major changes to UK banking regulations may impact Nationwide Building Society as well as other savings providers. A senior banking regulator provided MPs with an update on the matter.

Katharine Braddick addressed the Treasury Committee regarding regulation of the banking industry. Her appearance before the MPs came as she has been appointed as the Bank of England’s new deputy governor for prudential regulation and chief executive of the Prudential Regulation Authority. She is set to assume the position in June 2026.

Among the topics raised by the committee were the leverage ratio buffers that currently limit the operations of building societies including Nationwide. The inquiry followed previous testimony from the Building Societies Association to MPs, suggesting that reforming these capital restrictions could unlock new services across the sector.

Sarah Harrison, chief executive of the association, told the committee in a previous session: “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.”

Unlocking more services

These restrictions are designed to guarantee that lenders retain adequate reserves to sustain their operations should their investments or loan repayments falter. Ms Harrison said: “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 told her that without the buffer, the organisation could potentially release an additional £30billion in capital to be directed towards business or mortgage lending. When questioned on the matter, Ms Braddick was unwilling to make any firm commitments in her response.

She informed 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 position on whether these capital regulations ought to be eased.

A spokesperson responded: “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.”