Banking sector regulatory capital - 2020 Q4

This quarterly statistical release shows levels of capital and risk-weighted assets for the UK banking sector. It includes breakdowns of the movements in different tiers of capital and risk exposure types, and overall capital ratios.
Published on 26 March 2021

Key points

  • The Common Equity Tier 1 (CET1) capital ratio for the UK banking sector increased by 0.1 percentage points on the quarter to 16.2%.
  • The level of CET1 capital decreased by 1.9% on the quarter, from £464bn to £455bn.
  • There was a 2.7% decrease in total risk-weighted assets on the quarter, from £2,880bn to £2,803bn.

Table A: Capital ratios and levels of capital and risk-weighted assets in the UK banking sector (a)

2019 Q4

2020 Q1

2020 Q2

2020 Q3

2020 Q4

One quarter

Four quarters

Ratios (per cent)

Change (percentage points)

Total capital

21.3

20.4

21.3

21.7

21.6

-0.1

0.3

Tier1

17.9

17.2

17.9

18.4

18.5

0.1

0.6

CET1

15.6

15.0

15.7

16.1

16.2

0.1

0.6

Values (£ billions)

Change (per cent)

Total capital

589

615

633

624

605

-3.0

2.7

of which: Tier1

497

517

534

529

518

-2.1

4.2

of which: CET1

432

453

468

464

455

-1.9

5.3

of which: Tier2

92

98

99

95

86

-9.5

-6.5

Risk-weighted assets

2,772

3,010

2,976

2,880

2,803

-2.7

1.1

Footnotes

  • (a) Figures throughout this document may not correspond exactly due to rounding.

Chart 1: Capital ratios for the UK banking sector

Chart 2: Contributions to quarterly change in total capital ratio (a) (b)

Footnotes

  • (a) See Further details about these data for information on the calculation of these contributions.
  • (b) Data for all charts has been sourced from the banking sector regulatory capital data tables.

Table B: Risk-weighted assets by risk type (£ billions) (a)

2019 Q4

2020 Q1

2020 Q2

2020 Q3

2020 Q4

One quarter

Four quarters

Values (£ billions)

Change (per cent)

Total risk-weighted assets

2,772

3,010

2,976

2,880

2,803

-2.7

1.1

Credit and counterparty risk

2,005

2,176

2,119

2,078

2,025

-2.6

1.0

Market risk

354

412

433

389

379

-2.6

7.1

Operational risk

292

298

302

296

288

-2.7

-1.4

Credit Valuation Adjustment

76

87

98

87

77

-11.5

1.3

Other

45

36

25

30

35

16.7

-22.2

Footnotes

  • (a) The categories of risk-weighted assets used are as defined in the reporting templates in the annexes to the Implementing Technical Standards (ITS) on Supervisory Reporting (Regulation (EU) No 573/2013).

Chart 3: Changes in risk-weighted assets by risk type

Comparison of published capital ratios for the UK and the EU

Capital ratios for the UK banking sector are published by a number of organisations; the Bank of England (BoE), the European Central Bank (ECB), the International Monetary Fund (IMF) and the European Banking Authority (EBA). These ratios are not identical due to differences in firm coverage, use of transitional or endpoint capital, method of averaging and data revisions as explained below. Chart 4 shows a comparison of published capital ratios for the UK in the panel on the left with EU average ratios published by the EBA in the panel on the right. Table C provides descriptions of the underlying datasets and provides links to their definitions.

Chart 4: Comparison of published capital ratios for the UK and the EU

The effects of the differences in datasets and methodologies can be generalised as follows:

  • Firm coverage – the BoE, the ECB and the IMF publish capital ratios that represent averages of the total UK banking sector. While they all use the same data, the ECB and IMF publications are less timely and may include minor differences when compared with BoE data due to revisions. EBA aggregate statistical data exclude designated investment firms that are subsidiaries of banks headquartered outside the UK. The Financial Policy Committee’s (FPC) indicatorsfootnote [1] cover major UK banksfootnote [2] only, rather than the total UK banking sector, and this generally has a downward effect on the ratio. The EBA publish tables showing average capital ratios for a sample of EU banks, including UK banks, which have been included in Chart 4 for comparison. While they also publish charts showing UK ratios, the data behind these charts are not currently available for publication in this release.
  • Averaging method – the EBA Risk Dashboard presents key risk indicators as percentiles (medians shown in Table C) rather than as weighted means, which will tend to have an upward effect.
  • Use of transitional or endpoint capitalfootnote [3] – the use of endpoint capital will tend to have a slight downward effect on ratios, compared to those using transitional capital.
  • Timing – both timeliness and frequency vary across datasets. The banking sector regulatory capital statistical release and FPC indicators are the timeliest. The EBA aggregate statistical data are published annually while all other datasets are published quarterly.

Table C: Description of different published capital ratios for the UK

Publishing institution

Dataset

Firm coverage

Transitional or endpoint capital

Averaging method

Bank of England

Banking sector regulatory capital

Total UK banking sector

Transitional

Mean

European Central Bank

Consolidated banking data (a)

Total UK banking sector

Transitional

Mean

International Monetary Fund

Financial soundness indicators

Total UK banking sector

Transitional

Mean

Bank of England

FPC indicators

Major UK Banks

Transitional (b)

Mean

Bank of England

EBA aggregate statistical data

UK credit institutions

Transitional

Mean

European Banking Authority

Risk Dashboard and Key Risk Indicators

EU banking sector

Transitional

Median

Footnotes

  • (a) These data are not available after Q4 2019, as the ECB has ceased publication of consolidated banking data for the United Kingdom from that point.
  • (b) From 2018, Basel III Tier 1 capital ratios reflect IFRS 9 transitional arrangements as agreed in European law.

Queries

Next release date: 9 July 2021

  1. Prior to December 2020 the FPC published a CET1 capital ratio as its Core Indicator for risk-based capital. Since December 2020 the Core Indicator has been Tier 1 capital.

  2. The group currently includes Barclays, Co-operative Banking Group, HSBC, Lloyds Banking Group, Nationwide, RBS, Santander UK and Virgin Money. Note, Virgin Money are only included from 2020 Q4 onwards.

  3. See explanatory notes for more detail.

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