Small banks in the UK can benefit from simpler regulations post-Brexit boosting competitiveness in the sector, said the Bank of England (BoE).
BoE deputy governor Sam Woods said that currently the central bank is assessing the steps taken by the US and Swiss regulators to relax banking regulations for smaller banks.
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However, he also noted that BoE is committed to keep banking safe and any step taken will seek to increase competition in the sector.
Currently, the country’s banking system is guided by the EU financial regulations. The UK is scheduled to leave the EU on 29 March 2019.
Woods said: “There may be a reasonable case that a simpler — simpler not weaker — regime for small firms would advance both our safety and soundness and competition objectives.
“It is impossible to know at this stage, but under some Brexit outcomes we might have room to revisit this question for small domestic firms.”
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By GlobalDataThe UK retail banking sector is largely dominated by four banks including Barclays, Lloyds, RBS and HSBC.
In the last five years, the central bank had authorised 17 new lenders. However, none of them have emerged as a challenger to the ‘Big Four’.
Deputy Governor Woods attributed the reluctance of the customers to switch accounts as one of the reasons why the sector continues to be dominated by these four banks.
