Nationwide Building Society has confirmed its backing for proposed capital reforms that would unlock over £40 billion in new lending for mortgages and businesses, providing a major boost to the UK economy. The UK's largest building society, which operates branches in Birmingham, responded after the Bank of England's Financial Policy Committee (FPC) announced its intention to lower capital buffer requirements for banks and building societies.
Capital Requirements to Decrease
Under the proposed changes, Nationwide's required capital buffer would fall from 4.3 per cent to 3.75 per cent of exposures. This reduction would free up significant capital, creating the potential to support up to £40 billion of additional lending across mortgages and business finance.
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.”
Supporting All Borrowers
The additional lending capacity would reinforce Nationwide's role as an all-round lender, supporting all types of borrowers across the housing market. It would also increase finance available to small and medium-sized enterprises (SMEs) 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.
Regulatory Context
The proposed changes to the leverage framework follow a challenge from the Chancellor to regulators to review capital requirements to promote economic growth. Nationwide believes the reform presents an opportunity to sensibly and safely recalibrate the rules for low-risk, domestic lenders like itself. Currently, requirements are particularly restrictive for building societies, as they fail to consider the low-risk nature of building society lending.
Nationwide asserts that reforming the current framework would enable mutuals to play an even greater role in supporting the Government's objectives for growth, competition, and financial inclusion.
