Nationwide has welcomed plans to overhaul capital requirements that would enable Britain’s biggest building society to unlock over £40 billion of potential new lending to support mortgages and small and medium sized businesses.
It comes after the Bank of England’s Financial Policy Committee (FPC) announced its intention to lower the capital buffer requirements for banks and building societies1. For Nationwide, this would reduce the amount of capital required from 4.3 per cent to 3.75 per cent of exposures, freeing up capital and creating the potential to support up to £40 billion of additional lending.
Dame Debbie Crosbie, Chief Executive of Nationwide Building Society, said: “This reform would boost the economy by unlocking over £40 billion of new Nationwide lending for mortgages and business growth. A more proportionate framework would recognise the low-risk nature of building society lending while preserving the resilience of the financial system. We are ready to work with regulators to turn that opportunity into real support for the UK economy."
The additional capacity would further reinforce Nationwide’s role as an all-round lender, supporting all types of borrowers across the housing market, while also increasing finance available to small and medium sized businesses as they invest and grow. Nationwide already provides business banking services through Virgin Money and plans to launch a new Nationwide branded business banking proposition next year.
The proposed changes to the leverage framework come after the Chancellor challenged regulators to review capital requirements to promote economic growth. It presents an opportunity to sensibly and safely recalibrate the rules for low-risk, domestic lenders like Nationwide.
Nationwide believes reform of the current framework would enable mutuals to play an even greater role in supporting the Government’s growth, competition and financial inclusion objectives. Currently, the requirements are particularly restrictive for building societies, given they fail to consider the low-risk nature of building society lending.
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