Changes in capital requirements are shaping banks’ capacity to lend and return money to shareholders. Major Swedish lender SEB paused buybacks as supervisory model adjustments and loan growth put pressure on its capital buffer. Barclays announced another repurchase as lower requirements were expected to cushion the initial impact of Basel 3.1, while EU lawmakers agreed capital relief for qualifying securitisations.

Credit quality and valuation losses presented a more mixed picture. Bank of the Philippine Islands’ quarterly provisions fell as problem-loan metrics weakened, while India’s IndusInd Bank reported lower fresh slippages alongside substantial write-offs. At US lender Huntington Bancshares, interest-rate-related valuation losses weighed on equity measures even as its regulatory capital ratio improved.

Read more on the week’s key developments:

1. SEB pauses buybacks as model adjustments constrain capital headroom

Sweden’s SEB announced on 22 October that it would pause share buybacks, citing continued loan growth and the capital impact of the Swedish Financial Supervisory Authority’s review of its internal credit-risk models. The bank reported a common equity tier 1 (CET1) ratio of 17.1% and a capital buffer of 250 basis points at September-end.

The supervisor required SEB to increase risk-weighted exposures to address deficiencies in its regulatory models, reducing its capital buffer by an estimated 120 basis points based on its June-end position. The temporary adjustment will take effect by 31 December 2026 and remain until revised models receive regulatory approval. SEB expects to begin submitting model applications by the third quarter of 2027 at the latest. Pausing buybacks preserves capital as the bank accommodates the adjustment alongside continued lending growth.

2. Barclays announces another buyback as lower requirements cushion Basel 3.1 impact

Barclays announced a further GBP 500.0 million ($668.4 million) share buyback on 22 October, following completed repurchases totalling GBP 1.5 billion and an ongoing GBP 1.0 billion programme announced with its second-quarter results. Its CET1 ratio stood at 14.2% at September-end and would have been 14.0% after incorporating the new repurchase, at the upper end of its 13–14% target range.

Barclays expected Basel 3.1 implementation in January 2027 to reduce its CET1 ratio by 30–55 basis points through higher risk-weighted assets. However, a 59-basis-point reduction in its Pillar 2A CET1 requirement would lower the threshold for automatic distribution restrictions from 12.2% to 11.6%. This would preserve its headroom for shareholder distributions despite the initial Basel 3.1 impact.

3. EU agrees lower capital requirements for qualifying securitisations

The Council and European Parliament reached a provisional agreement on 21 October to revise the EU securitisation framework. The changes included lower capital requirements for qualifying transactions, a new “resilient” category and reduced administrative burdens. Legal finalisation and formal adoption remained outstanding.

Under the existing internal ratings-based and standardised securitisation approaches, senior simple, transparent and standardised (STS) positions carried a 10% risk-weight floor. Banking industry association AFME reported that the agreement would introduce ultimate floors of 5% for resilient STS securitisations and 7% for non-resilient STS securitisations, while acknowledging that it had not seen the final legal text. Lower floors can reduce capital requirements where they determine the applicable risk weight. Shaun Baddeley, AFME’s managing director of securitisation, said the reported treatment of non-STS transactions under the standardised approach remained overly conservative.

4. RBI sets April 2027 implementation for operational-risk capital and leverage changes

The Reserve Bank of India issued directions on 23 October setting 1 April 2027 as the commencement date for its operational-risk capital framework and revised leverage requirements. The leverage framework specified base minimum ratios of 4% for domestic systemically important banks and 3.5% for other banks, with additional provisions for global systemically important banks. The operational-risk amendments completed financial-statement mappings and clarified calculation inputs.

The outgoing Basic Indicator Approach linked operational-risk capital to average gross income over three years, using a 15% charge. The replacement combines a broader business indicator with a bank’s historical operational losses for larger institutions holding at least five years of qualifying loss data. Past losses can therefore influence capital requirements after their initial effect on earnings, differentiating banks with similar business volumes but different loss histories. RBI can impose a loss multiplier above one where the prescribed data criteria are not met.

5. Huntington’s capital ratios diverge as interest-rate losses deepen

Huntington Bancshares reported on 22 October that its regulatory CET1 ratio increased from 10.0% in June to 10.1% in September, while its tangible common equity-to-tangible assets ratio declined from 7.1% to 6.9%. The bank attributed the latter decline principally to valuation movements associated with higher market interest rates and growth in tangible assets. It also repurchased $100.0 million of shares during the quarter.

Accumulated other comprehensive losses widened by $761.0 million during the quarter. Huntington’s adjusted CET1 measure, which included accumulated other comprehensive income or losses but excluded cash-flow hedges, fell from 9.0% to 8.9%. This was a supplementary measure rather than a regulatory requirement.

6. BPI’s quarterly provisions fall as problem-loan metrics weaken

Bank of the Philippine Islands (BPI) reported on 21 October that nine-month provisions reached PHP 19.9 billion ($312.7 million), up 69.2% year on year. Its non-performing loan (NPL) ratio rose quarter on quarter to 2.50%, while NPL coverage stood at 89.6%. Third-quarter provisioning nevertheless declined 16.5% from the preceding quarter.

In June, BPI had reported an NPL ratio of 2.42% and coverage of 92.98%, attributing higher first-half provisions to deteriorating macroeconomic conditions and expectations. By September, the NPL ratio was eight basis points higher and coverage approximately 3.4 percentage points lower. The quarterly earnings charge had therefore eased while the reported problem-loan measures weakened.

7. IndusInd lowers provisions as new problem loans decline, with write-offs also reducing reported stress

IndusInd Bank disclosed on 23 October that consolidated provisions and contingencies fell 54% year on year to INR 12.2 billion ($128.8 million) in the September quarter. Its gross NPL ratio declined from 3.25% in June to 2.73%, while annualised credit costs fell from 1.74% to 1.40%. Chief financial officer Viral Damania attributed the lower provisions to reduced net additions to non-performing loans.

The improvement reflected both lower fresh stress and the removal of existing bad loans. Write-offs of INR 16.7 billion ($176.0 million) exceeded new non-performing loan additions of INR 14.6 billion ($153.8 million). Separately, the annualised gross slippage rate, measuring loans newly becoming non-performing, fell from 2.1% to 1.8%.

8. First Citizens expands fund lending as aggregate reserve coverage falls

First Citizens reported on 23 October that loans and leases reached $157.2 billion, up 4.1% quarter on quarter, with commercial growth concentrated in Fund Banking. Its allowance-to-loans ratio declined to 0.91% from 0.98%. The quarter included a $48.0 million reserve release, although the bank still recorded a positive $50.0 million provision for loan and lease losses.

The bank attributed part of the reserve movement to growth in capital-call lines, which had lower historical losses than its other portfolios. These facilities bridge the interval between fund investments and calls on limited partners. Their repayment mechanism differs from asset-based fund lending supported by portfolio investments. These differences matter when assessing banks’ exposure to private-credit funds. Growth in a lower-loss product can therefore reduce aggregate reserve coverage.

9. UK proposes reducing senior approvals and removing annual staff certification

The Prudential Regulation Authority and Financial Conduct Authority proposed changes to the Senior Managers and Certification Regime on 22 October. Regulatory pre-approval would be replaced by notification for selected roles, including chairs of risk and audit committees. The proposals would also remove the Certification Regime for approximately 139,000 employees below senior-manager level. Chief executives, chief financial officers and board chairs would retain pre-approval requirements.

The PRA proposed ending prescribed fitness-and-propriety assessments on appointment and annually for staff leaving that regime, alongside the requirement to obtain regulatory references. Its consultation acknowledged that firms might consequently receive less detailed information about recruits, but judged the existing burden disproportionate. Broader competence and conduct obligations would remain.

10. ECB sets BPER’s 2027 CET1 requirement at 9.60%

BPER Banca announced on 21 October that the European Central Bank’s supervisory review required it to maintain a consolidated CET1 ratio of 9.60% and total capital ratio of 14.15% from 1 January 2027. The bank cited a pro-forma CET1 ratio of 14.95% at June-end, including eligible retained interim profits. That comparison indicated 535 basis points above the announced CET1 requirement, although it compared June capital with a requirement taking effect in January.

Compared with BPER’s October 2025 decision, the CET1 requirement was 20 basis points higher, but the CET1 component of its bank-specific Pillar 2 requirement remained unchanged at 1.35%. The difference came from combined buffers increasing from 3.55% to 3.75%.