The Bank of England's financial policy committee is moving forward with plans to relax post-2008 financial safeguards for the country's largest domestic lenders, including NatWest, Lloyds, and Nationwide. The proposal would remove certain leverage ratio requirements that currently force banks to maintain larger financial cushions, potentially reducing those requirements by an average of 20 basis points and giving domestic banks a competitive edge against international peers.

However, several policymakers have raised concerns that easing these rules could worsen existing financial system vulnerabilities. They worry that looser capital requirements may fuel additional lending to heavily leveraged investors, particularly hedge funds using borrowed money to purchase stocks in booming AI sectors. Additionally, the central bank flagged growing risks from rapid AI advancement, noting that frontier AI systems could enable malicious actors to launch larger-scale cyberattacks on financial institutions at lower cost. The committee will conduct a full review by late September to assess whether the proposal creates unacceptable financial stability gaps before moving to formal consultation in early 2027.