IFRS 9 relief added £8bn to UK banks’ capital buffers in 2020

Special measures relaxing rules on how loan-loss provisions are deducted from regulatory capital boosted top UK banks’ core solvency ratios over 2020.

Lloyds reaped the largest benefit. Without the relief, its Common Equity Tier 1 (CET1) capital ratio would have been a full 120 basis points lower at end-2020 than reported.

Early on in the coronavirus crisis, the Bank of England allowed banks to ‘add back’ income put aside to cover future loan losses under IFRS 9 accounting standards into CET1