IFRS 9 relief added £8bn to UK banks’ capital buffers in 2020
Lloyds’ CET1 ratio reaped a 120bp benefit
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
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