City Welcomes Banking Watchdog's New Pro-Growth Chief Katharine Braddick
The City of London has extended a warm welcome to Katharine Braddick, a seasoned financial expert, who was officially named on Friday as the new chief of the banking watchdog. Braddick succeeds Sam Woods at the Prudential Regulation Authority (PRA), stepping into a role that comes with an annual salary of £314,000 and the critical task of steering the UK's banking sector toward growth.
Reeves Champions Pro-Business Leadership
Chancellor Rachel Reeves, who spearheaded the recruitment effort, praised Braddick as an "accomplished pro-business leader" who supports "lending that drives growth." This emphasis on growth appears to have been a decisive factor in her selection, as Reeves has consistently positioned financial services at the core of her economic strategy. However, this mission has faced recent challenges due to several weak GDP reports.
In her push to revitalize the economy, Reeves has targeted regulators perceived as obstacles. Earlier in January 2025, Marcus Bokkerink, chair of the UK's competition watchdog, was removed by the government for not aligning sufficiently with the growth agenda. Subsequently, the Payment Systems Regulator was dismantled and largely integrated into the Financial Conduct Authority, part of Reeves' broader campaign against regulatory "red tape."
Navigating Resistance from the Bank of England
Despite these efforts, Reeves has encountered resistance from the Bank of England, where the PRA is housed. Governor Andrew Bailey has defended the role of regulation in the economy, countering the notion that all regulatory measures hinder growth. Faced with a central bank reluctant to relax its oversight, Reeves sought an outsider with strong City credentials to lead the PRA.
Katharine Braddick's appointment has been hailed by RBC analyst Benjamin Toms as the "first time since the financial crisis that a bank-friendly appointment has been made by the regulator." Her background spans both the public and private sectors, including a four-year role as head of strategic policy at Barclays and nearly eight years at the Treasury, where she rose to become one of its top civil servants.
Braddick's Experience and Industry Reception
During her tenure at the Treasury, Braddick played a key role in negotiating post-Brexit access for British financial services in the EU. Her appointment follows reports from Sky News that she was set to compete with PRA incumbent David Bailey, who previously stated the watchdog had "absolutely no intention of weakening prudential regulation in the UK."
Industry leaders have welcomed Braddick's selection. Chris Hayward, policy chair at the City of London Corporation, expressed confidence in her abilities, stating he could "think of no one better" for the position. The London Market Group described the nomination as a "very welcoming sign," while a City banking chief highlighted her valuable cross-sector experience.
Another senior City source noted that her diverse background should be "essential" for candidates, though they cautioned that Braddick will likely face a full agenda in accelerating what has been a "slow" pace of deregulation.
Key Challenges on the Horizon
Braddick's immediate priorities include addressing two persistent issues in the City. First is the internal-ratings based system (IRB), which has historically placed challenger banks at a disadvantage by requiring them to hold more risk weight on loans compared to larger institutions. Second is the ring-fencing regime, established after the financial crisis under the Financial Services Act 2013, which mandates major banks to separate retail and investment banking operations to ensure stability.
Top executives from HSBC, Lloyds, Natwest, and Santander have lobbied Reeves to eliminate what they call a "redundant" system. In contrast, Barclays CEO CS Venkatkrishnan (known as Venkat) has defended ring-fencing, emphasizing the "immense amount of depositor protection" it provides. Notably, Braddick previously served as an adviser to Venkat.
Analyst Perspectives on Deregulation
John Cronin, a banking analyst at Seapoint Insights, commented that he does not expect Braddick to pursue an "abolitionist agenda" regarding ring-fencing. However, despite her ties to Barclays, he would be "highly surprised if she doesn't press for reforms." Cronin added that deregulation is likely to remain on the agenda moving forward, but warned against assuming Braddick "will just dance to the government's tune," suggesting she will bring an independent perspective to the role.
As Braddick assumes her position, the financial community watches closely to see how she balances the government's growth objectives with the need for prudent regulation, setting the stage for potential shifts in the UK's banking landscape.
