Nationwide has issued an update regarding changes to UK legal restrictions affecting building societies. Katharine Braddick, who has been appointed as the new deputy governor for prudential regulation at the Bank of England and chief executive of the Prudential Regulation Authority (PRA), spoke to the Treasury Committee about the oversight of the banking industry.
Braddick addressed MPs during her appointment process, with her role set to begin in June 2026. A key topic was the leverage ratio buffers that restrict building societies such as Nationwide, the largest building society in the country, with branches in Birmingham.
Concerns Over Capital Requirements
Sarah Harrison, chief executive of the association, previously told the committee: "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."
She warned: "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."
Braddick's Response
Ms Braddick told 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 faces competition from HSBC UK, Lloyds, Barclays, NatWest, and others. A spokesperson said: "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."
