Britain's biggest lenders accuse the Bank of England of a flawed transatlantic capital comparison that ignores Wall Street's growing edge from digital investment. A new study shows US banks benefit from regulatory easing under President Donald Trump, particularly in how software investments are treated.

UK banks are lobbying Prime Minister Andy Burnham and Chancellor John Healey, arguing post-2008 restrictions hinder growth and IT investment. They hope former Barclays executive Katharine Braddick, now the top UK banking regulator, will be receptive. The BoE claimed in December that UK capital requirements were lower than US peers, but a rival study commissioned by UK banks found the opposite: big UK banks average 11.8 per cent CET1 vs 10.6 per cent for top US banks.

After adjusting for software treatment differences — UK banks deduct software assets while US banks risk-weight them — UK requirements are 1.3 percentage points higher, widening to 1.9 points with expected US deregulation. That gap equals £22.5bn of CET1 capital or £750bn lending capacity. Software deductions cut UK banks' capital by £5.5bn in 2024. The PRA maintains full deduction, asserting software has no recoverable value in a crisis.