No company was named, so this edition is written for a typical large listed UK regional bank, tracked against Close Brothers, Paragon, OSB, Shawbrook, Investec and the big UK lenders. The month turned on Budget tax risk, higher funding and swap costs, and unresolved motor finance redress.
01Reuters via LSE · Oct 1Gilt yields at 1998 highs and bank-tax fears hit UK bank shares
On Oct 1, Reuters reported UK 30-year borrowing costs at their highest since 1998. The FTSE 350 banks index fell 4.5%, its largest one-day drop since May 5. NatWest fell 5.4%, Lloyds 4.4% and Barclays 4%.
Reuters said the falls deepened after Sky News reported that the heads of major lenders had been summoned to meet Chancellor John Healey before the Autumn Budget on October 28, as expectations built of possible bank taxes. The share moves are context only; the underlying events are the bond sell-off and the tax risk.
Decision for the bank: stress-test the plan against a higher-for-longer gilt curve and a possible surcharge rise before the Oct 28 Budget.
02City AM · Sep 28Mid-tier lenders lobby to lift bank surcharge allowance to £500m
Revolut, Monzo, Shawbrook, Investec, Aldermore and OSB wrote to Healey asking that the profit allowance exempt from the 3% bank surcharge rise from £100m to £500m. City AM reports the letter was signed by the Shawbrook and Paragon chief executives among others. The group says it accounts for 60% of UK SME lending and puts the Treasury cost at £39m.
The group warned that any surcharge rate rise would have a disproportionate impact on mid-tier and specialist banks. On Oct 5 City AM reported that an analyst expects some lobbying success but doubts the full £500m. This is lobbying, not policy.
Decision for the bank: decide now whether to back the threshold ask, and model profit after tax under a higher surcharge rate versus a higher allowance.
03Financial Times · Oct 5Banks press Treasury to cut countercyclical buffer and ease software capital rules
A summary of the FT report says Treasury committee chair Meg Hillier expects Barclays, HSBC, Lloyds, NatWest, Nationwide and Santander to ask on Tuesday (Oct 6) for more capital freedom. The asks are a lower countercyclical buffer than 2% and a change to the treatment of software assets. They also want relief via the Chancellor's remit letter to the Bank of England. This is a secondhand summary of a paywalled FT article.
The Financial Policy Committee's Q3 record, dated Sep 25 and published Sep 30, maintained the UK countercyclical buffer at its neutral 2%. It also agreed to proceed with leverage ratio reforms, on which the Bank expects to consult in early 2027.
Decision for the bank: do not plan on buffer relief; keep capital targets and growth plans valid at a 2% buffer.
04Bank of England · Sep 17Bank of England holds at 3.75% as three MPC members vote to hike
The MPC voted 6–3 on Sep 16 to hold Bank Rate at 3.75%; three members wanted 4%. August CPI inflation was 3.1% and is expected to reach around 3¾% in 2026 Q4 and slightly above 4% in 2027 Q1, driven by energy prices linked to the Middle East conflict. The MPC also unanimously set a multi-year plan to take the government bond purchase stock to zero.
The minutes say the short-term rate curve peaked at around 4.9% by end-2027, and the FPC record shows new bank lending to SMEs at an effective 6.61% in July, up from 6.36%. Higher funding and swap rates raise loan pricing, but also stress for energy-exposed SMEs.
Decision for the bank: reprice SME and mortgage books and review deposit pass-through for a rate path that may rise rather than fall.
05Close Brothers · Sep 29Close Brothers adds £164.7m motor finance provision and skips final dividend
For the year to Jul 31, 2026, Close Brothers reported a statutory pre-tax loss of £60.3m (prior year £122.4m loss) and added about £165m to its motor finance provision, taking it to about £320m. It paid no final dividend. CET1 was 14.1% against a 12–13% medium-term target, and it cites capacity to absorb Basel 3.1 from Jan 1, 2027.
AM-online reports other lenders' provisions: Lloyds £1.95bn at end-June 2026 and Barclays £430m. The FCA estimates £7.5bn of redress. Parts of the scheme were suspended by the Upper Tribunal in July; a case management hearing runs Oct 5–6, with substantive challenges listed for Dec 14–18, 2026 or Feb 16–26, 2027.
Decision for the bank: keep provisioning and dividend policy flexible until the tribunal sets its timetable, and check historic motor finance exposure and data readiness.
06The Independent · Sep 25Santander UK online banking outage hits thousands on Sep 25
Santander UK confirmed customers could not access some banking services; the website and apps were both affected, and the website later recovered. The Independent notes Lloyds customers were locked out of mobile apps twice in just over a week in the previous month.
Santander completed its £2.65bn acquisition of TSB in May and is integrating it. It pledged in July to keep 305 Santander and 175 TSB branches open until 2028. The outage cause was not stated in the source.
Decision for the bank: confirm resilience testing and customer communications plans for peak-time outages, especially during any core system or migration work.
Enable JavaScript to read this edition.