The Reserve Bank of India proposed an additional leverage buffer for Indian branches of global systemically important banks (G-SIBs), while the Federal Reserve Banks of New York and Dallas moved to examine risks in the $1.3 trillion US private-credit market.

Banks also adjusted their balance sheets as they pursued growth and shareholder returns. UOB’s asset-management sale is expected to release capital, Metro Bank expanded lending as its capital and liquidity ratios declined, and HSBC resumed share buybacks.

Read more on the week’s key developments:

1. RBI proposes additional leverage buffer for Indian branches of G-SIBs

The Reserve Bank of India (RBI) proposed that Indian branches of G-SIBs maintain a minimum leverage ratio of 3.5% plus an applicable leverage-ratio buffer. Domestic systemically important banks (D-SIBs) would continue to face a 4% minimum. The leverage ratio measures Tier 1 capital against total on- and off-balance-sheet exposures and acts as a non-risk-based backstop to risk-weighted capital requirements.

The additional buffer would increase the leverage requirement for Indian branches of G-SIBs and may particularly affect balance-sheet-intensive wholesale activities that attract relatively low risk-based capital charges. The impact will depend on each branch’s existing leverage headroom.

2. New York and Dallas Feds probe private-credit risks as bank exposure expands

The Federal Reserve Banks of New York and Dallas will launch a pilot survey of the US private-credit market after the third quarter of 2026, covering credit availability and lending standards across different borrower sizes. The first results are expected in early 2027. The initiative comes as bank links with private credit deepen. JPMorgan Chase has about $14 billion of direct-lending assets on its balance sheet under a commitment to allocate up to $50 billion to the business. It also provides financing to established direct lenders and reported about $50 billion of total exposure to private-credit funds in April.

The survey could give supervisors greater visibility into concentration and transmission risks between regulated banks and private lenders. Federal Reserve data show bank credit commitments to non-bank financial institutions reached $2.6 trillion in the fourth quarter of 2025, with private equity, business development companies and private-credit vehicles the largest exposure category. Commitments to this segment represented about 25% of total bank commitments to NBFIs and increased 17% year on year.

3. UOB releases capital through asset-management sale

UOB agreed to sell UOB Asset Management to Allianz Global Investors for SGD 555 million ($434 million). UOB expects the transaction to generate a pre-tax gain of about SGD 330 million ($258 million) and increase its Common Equity Tier 1 (CET1) ratio by approximately 14 basis points. UOB Asset Management managed about SGD 42 billion ($32.8 billion) in assets at the end of 2025. The transaction is expected to be completed in 2027, subject to regulatory approval.

The sale shifts UOB’s investment-product model towards distribution and away from owning the asset-management platform. The 14-basis-point CET1 uplift provides modest additional capital headroom, while the long-term arrangement with AllianzGI will allow UOB to retain access to investment products once it gives up ownership of the manufacturing business.

4. Metro Bank expands lending amid lower capital and liquidity ratios

Metro Bank reported record first-half profit on 4 August alongside strong lending growth across its core businesses. Its results showed continued balance-sheet deployment towards higher-yielding corporate, commercial and SME lending. The bank’s CET1 ratio stood at 12.3%, down from 12.5% at the end of 2025, while its liquidity coverage ratio declined to 270% from 306%. Metro Bank entered 2026 with its capital position described as optimised for growth following earlier balance-sheet restructuring and changes to its minimum requirement for own funds and eligible liabilities.

The decline in CET1 and liquidity ratios comes as Metro Bank expands higher-yielding lending following its earlier balance-sheet restructuring. Both ratios remain above regulatory requirements, but further loan growth will need to be supported by capital generation and deposit funding while maintaining sufficient regulatory buffers.

5. HSBC resumes $1 billion buyback as credit-loss guidance remains elevated

HSBC announced a share buyback of up to $1 billion after previously pausing repurchases while rebuilding capital following the privatisation of Hang Seng Bank. Its CET1 ratio returned to within its 14% to 14.5% target range at the end of June. HSBC had said it would not initiate further buybacks until the ratio returned within or above that range. The group also raised its 2026 expected-credit-loss guidance in May to around 45 basis points of average gross loans, from around 40 basis points previously.

The buyback shows that HSBC’s capital position has recovered sufficiently to resume distributions after the Hang Seng transaction. Higher expected credit losses, however, would absorb more pre-provision earnings than previously anticipated, potentially slowing capital generation for further distributions.

6. OCBC retains macroeconomic overlays as loans and non-performing assets increase

OCBC’s customer loans increased 11% year on year on a constant-currency basis to SGD 364 billion ($284 billion), while total non-performing assets rose 4% to SGD 3.13 billion ($2.44 billion). Its non-performing loan ratio remained stable at 0.9%. Total first-half allowances increased 14% to SGD 372 million ($290 million), including SGD 225 million ($176 million) for non-impaired assets that incorporated management overlays for macroeconomic uncertainty.

The retained overlays provide additional provisioning against risks that have not yet translated into identified impaired exposures. At the same time, loan growth expands the balance sheet against which capital must be held. With OCBC committed to completing its SGD 2.5 billion ($1.95 billion) capital return by the end of 2026, capital generation must support continued asset growth and distributions while maintaining precautionary loss reserves.

7. BPCE reports first period incorporating novobanco with CET1 at 15.5%

Groupe BPCE reported a CET1 ratio of 15.5% at the end of June after incorporating novobanco, which has been fully consolidated since 30 April. The first reported period incorporating the Portuguese bank showed a cost of risk of EUR 671 million ($773 million), equivalent to 29 basis points, alongside additional provisioning for future risks. Liquidity reserves stood at EUR 332 billion ($383 billion) and the liquidity coverage ratio was 141%.

The 15.5% CET1 ratio shows BPCE maintained a substantial capital position after novobanco's initial consolidation. A full reporting period will show whether novobanco’s earnings contribution offsets the additional risk-weighted assets and credit costs. Harmonising credit-risk measurement and provisioning will also affect the enlarged group’s capital efficiency.

8. MUFG increases domestic bond exposure while shortening duration

MUFG increased its domestic bond holdings by JPY 1.37 trillion ($8.7 billion) during the quarter to JPY 16.16 trillion ($103 billion), including JPY 14.49 trillion ($92 billion) of Japanese government bonds. It reduced the portfolio’s average duration to 1.2 years from 1.5 years at the end of March as Japanese government bond yields continued to rise.

Higher-yielding bonds can increase future interest income, while shorter duration limits sensitivity to further increases in yields. With unrealised losses on domestic bonds broadly unchanged at JPY 280 billion ($1.8 billion), the pace of further accumulation and duration positioning remains relevant to its interest-rate-risk management.

9. KBC slows build-up of geopolitical reserve while maintaining existing cushion

Belgian lender KBC reported lower impairment charges in the second quarter and said its addition to the reserve for geopolitical and macroeconomic risks was “significantly less” than in the first quarter, without quantifying the second-quarter amount in its headline results. KBC had increased the reserve by EUR 75 million ($86 million) in the first quarter, taking its combined expected-credit-loss and management-overlay cushion to EUR 175 million ($202 million).

Maintaining the overlay preserves loss-absorption capacity for risks not yet captured in specific loan impairments, while the smaller second-quarter addition reduces the drag on current-period earnings. KBC’s continued addition to the reserve indicates that it remains cautious about geopolitical and macroeconomic risks, although the undisclosed amount limits assessment of how much the cushion increased.

10. Nedbank faces higher credit costs ahead of NCBA acquisition

South Africa’s Nedbank reported a 26% increase in first-half impairment charges to ZAR 4.8 billion ($291 million), reversing the improvement recorded a year earlier. Headline earnings remained broadly flat at ZAR 8.4 billion ($509 million), as 4% growth in net interest income and a 10% rise in non-interest income absorbed the higher credit costs.

Nedbank is also preparing to acquire 66% of Kenya’s NCBA for ZAR 13.9 billion ($842 million), expanding its exposure to East Africa. Funding 80% of the consideration through new shares reduces the immediate cash-funding requirement but dilutes existing shareholders, while the capital impact will depend partly on the goodwill and risk-weighted assets recognised through consolidation. Attention will turn to whether NCBA’s earnings contribution offsets the additional shares issued and integration costs while preserving Nedbank’s capital ratios.

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