The chief executive of Lloyds Banking Group has urged the government to intensify its deregulation agenda, claiming that stringent post-financial crisis rules have acted as a brake on the UK's economic expansion.
Nunn Calls for Further Regulatory Reform
Charlie Nunn, who took the helm at Lloyds in 2021, acknowledged recent steps like the Chancellor's Leeds Reforms package as positive progress. However, he stressed that policymakers are "just at the start – there is more to do".
He pointed to the widespread trend of deleveraging – where banks reduce risk and pay down debt, often by holding capital rather than lending it out – as a key factor holding the country back. "The hard reality is the financial system deleveraging, which results in a massive deleveraging and de-risking the whole of society, has slowed down the UK in the race over a decade," Nunn stated.
He argued this process has stopped the financial sector from "doing what it does best, which is supporting businesses, customers and large institutions from appropriately putting capital to work and supporting the economy."
The Regulatory Tide Begins to Turn
This call for change comes as the regulatory landscape starts to shift. On Thursday 04 December 2025, the Bank of England announced a relaxation of capital requirements for UK lenders.
Governor Andrew Bailey described the move as a "sensible reflection of conditions," easing the core capital holding rules by one percentage point to 13 per cent. This reduces the volume of risk-weighted assets that banks must fund with capital that can absorb unexpected losses.
The decision follows the UK's seven largest banks – Lloyds, Barclays, Natwest, Santander UK, Nationwide, Standard Chartered, and Virgin Money – passing recent stress tests with flying colours. The Bank concluded these lenders were robust enough to continue lending even during a "severe but plausible" economic shock.
Learning from the Post-Crisis Era
The current framework, largely shaped by the international Basel III regulations, was a direct response to the 2008 global financial crisis. It more than doubled minimum core capital ratios and introduced strict buffers to curb excessive risk-taking.
When questioned on whether post-2008 regulation had been "overdone," Bailey noted the banking sector had weathered "very substantial" economic shocks "robustly" in recent years. "We learn from experience... that’s why we feel comfortable making these changes," he added.
For figures like Charlie Nunn, this regulatory adjustment is a welcome step, but only the beginning of what is needed to unlock capital and accelerate UK economic growth after a decade of caution.
