Financials Unshackled | Weekly Briefing of 30th Nov 2025 (UK Banks in festive spirit - and much more)
The independent voice on banking developments - No stockbroking, no politics, no nonsense!
The material below does NOT constitute investment research or advice - please scroll to the end of this publication for the full Disclaimer
Welcome to the Financials Unshackled Weekly Briefing of 30th November 2025 - your weekly pack for critique and curation of key banking developments over the last week.
✂️ What’s In This Note ✂️
In-Depth: UK Banks in festive spirit (picks up on taxes, the impending FPC Capital Framework Review, and the FCA’s motor finance redress scheme)
UK: Prospective capital optimisation benefits for UK challenger banks, Landlords hit with 2 pps increase in property income tax rate; FCA Chair on risk rebalancing; BARC buybacks; HSBA Chair contenders; NWG Retail Banking Investor Spotlight; OSB AT1 tender; PAG Development Finance maximum loan size increase; Revolut $75bn valuation; SHAW free float
Ireland: AIBG in the spotlight (Tier 2 issuance, Sustainability conference, Goodbody potential acquisition of BCP); CBI Money & Banking Stats; BPFI Mortgage Approvals; BIRG new housing supply initiatives
Europe: Proposals on simplification of capital buffers; ECB Financial Stability Review; Tokenised central bank money
Global: US leveraged loan sales under pressure; US eases enhanced SLR; valuing banks explainer piece
🔎 The Critique 🔎
🇬🇧 UK Banks in festive spirit
What’s the latest?: No change in the tax regime applicable to UK banks in the Budget on Wednesday 26th November. All eyes now on what comes from the FPC in its Capital Framework Review on Tuesday morning. Also notable that the FCA’s consultation on a motor finance redress scheme is due to close at 17:00 BST on Friday 18th December. It seems that festive spirits are in full swing with UK banks staging a very strong performance last week - partly owing to a relief rally given no tax changes and growing optimism about what the FPC’s Capital Framework Review will set out.
Unshackled Perspectives:
The FT reported ahead of the Budget that bank executives were told to adopt a positive tone in response to the Budget - though government officials commented to the newspaper that there was no “deal” with the sector. Lo and behold the banks’ concerted efforts to press on government to preserve the status quo in a bank taxes context (which went notably - and abruptly - quiet a few weeks ago as I wrote last week) worked and no change to the regime was effected. Then, multiple UK and international banks issued a wave of announcements in the wake of the Budget (Jill Treanor at The Sunday Times covers them well in this piece): Barclays (BARC) reiterated its commitment to the UK, boosting support for businesses and consumers with c.£45bn of increased lending over the next three years alongside £4.4bn of direct investment in its own UK operations; Lloyds Banking Group (LLOY) will make over £35bn of new finance available next year to companies operating and investing in the UK of which £9.5bn will be dedicated to SMEs and the bank will also channel an additional £1bn of lending to first-time buyers (by loosening the criteria for those who can borrow at up to 5.5x income as well as bringing self-employed borrowers into the higher LTI net); NatWest Group (NWG) announced partnerships with four UK universities to strengthen the UK’s innovation and startup ecosystem (which followed the bank’s appointment of Andrew Hunter as Managing Director of Venture Capital Coverage within its fast-growing Venture Banking team earlier in the week); JPM announced plans to build a new three million sqf tower in Canary Wharf; etc. To me this is almost entirely about presentation and optics - Financials Unshackled has always placed substance over style and doesn’t get fooled by these blatant PR exercises! These banks are committed to the UK anyway and keen to continue to churn out growth. Most of these lending commitments were happening / in train regardless - unless a completely leftfield adverse change had been announced in the Budget. Now, if bank taxes had been hiked it may have had some impact on banks appetite to lend - though, undoubtedly, many would reasonably argue that any change would have been ‘at the margin’. In short the sector did a good job of emphasising to the Chancellor the importance of financial services in the context of the government’s growth agenda.
Zoning in on the FPC’s Capital Framework Review (which is due to be published at 07:00 BST on Tuesday 2nd December), it appears that expectations are high that we will see some meaningful change. LLOY’s CFO remarked at the JPM UK leaders Conference on 18th November that it seems very unlikely that nothing comes out of this; the BARC Group FD noted at the same conference that we ought to see Pillar 2 requirements come down (given the FPC noted in July that it judges the level of capital in the banking system to be broadly appropriate) and, notably, raised BARC’s concern around potential for regulatory arbitrage between countries; the NWG CFO (at the same conference) reiterated that she feels quite positive about the framework review and referenced Sarah Breeden’s recent comments in this vein; and the NWIDE CFO Muir Mathieson commented on the society’s results call on 20th November that there is an opportunity to reduce risk weights on mortgages (noting the disconnect between crystallised realised losses on mortgages and the amount of capital that needs to fund them) as well as how it is now a sensible time to review the leverage ratio (NWIDE’s binding constraint). I suspect major UK banks are hoping for a meaningful reduction in their target CET1 ratios (potentially as high as one percentage point in my view) specifically on the back of the outcome of this FPC Review (Pillar 2 changes, CCyB restructuring?) - if that’s the case, this, taken together with other factors supporting target ratios refinement that appear to be ‘waiting in the wings’, means I think we could see some UK banks move their target CET1 range downward by more than one percentage point in 2026. I appreciate that I am at the bullish end of the spectrum here (worth reading this piece in The Sunday Times which flags others’ views) - meaning ‘the party is set to continue’ but that’s my view. Let’s see what comes next week.
Finally, while the consultation period in relation to the FCA’s proposed motor finance redress programme parameters will close on Friday 18th December, the regulator has said that the final rules are expected to be published in February or March of 2026. So, we won’t likely hear anything of significance before then. But I do expect some softening of the redress scheme parameters in the new year.
Indeed, an investor posed this question on a recent LinkedIn post I published on the regulatory and political tailwinds that the UK banks are enjoying here: “One might ask why this group can’t trade at 2x growing TNAV over time. Not predicting, just asking.”. My response was: “It is a fair question. perhaps if we saw consistent budgetary / govt policy stability, no further conduct issues / redress schemes of significance, and stability in an improved capital framework context in a continued constructive rate backdrop that could be achievable - but that’s just speculation of course”.
📌 The Curation 📌
🇬🇧 UK Unfiltered - My Top Picks 🇬🇧
1️⃣ Prospective capital optimisation benefits for UK challenger banks:
I appreciate it’s some weeks on since the publication of PS19/25 (’Restatement of CRR requirements’), the second instalment of the near-final implementation of the PRA’s CP13/24, on 28th October but I wanted to flag a very interesting discussion I had with a couple of senior executives at Alantra’s London office earlier this week in an associated challenger bank prospective capital optimisation context. In short, we discussed two aspects of the aforementioned Policy Statement. Firstly, we touched on how the authorisation of unfunded protection in the context of SRTs from 1st January 2026 opens the UK market to insurers and re-insurers to provide credit risk mitigation - this should result in a lower cost of capital for banks, consistent with the experience of European banks where unfunded SRTs have been permissible for some time (though it is notable that the Danish Presidency of the EU has reportedly suggested just this week that the ESRB “should monitor macroprudential risks associated with the provision of unfunded credit protection under the STS label”, according to Bloomberg here on Monday). The second aspect of PS19/25 that we discussed is that a new formula is set to be introduced on securitisations for standardised portfolios with effect from 1st January 2027 - which will serve to improve the economics of SRTs in the case of most loan assets. In technical terms, the junior securitisation tranches for those asset classes placed to achieve a SRT will not have to be as thick as is the case under current UK regulations - and, by having to place a smaller portion of the capital stack to achieve a SRT, the economic benefits will therefore be greater (in the past the cost was effectively inhibitive for standardised portfolio SRTs).
I am by no means an expert in this space but have been following SRTs over the years with great interest and the call with the chaps at Alantra was highly educational as they have advised on the execution of many similar trades in a European context. Without putting any numbers on it at this point, the associated reduction in the cost of capital could be substantial for standardised portfolios (given the divergence between the market view and the regulatory view of risk as I see it) - with those benefits significantly overshadowing the associated coupon cost for the bank. However, there are naturally some considerations to be reflected upon in the context of high-growth loan portfolios given IFRS 9 impacts (Day 1 ECL charges) which can serve to trim the scale of capital that is released for redeployment. This is a topic I am likely to return to in some depth in 2026 given it seems likely that a significant number of UK challenger banks are carefully considering their options for 2027 and beyond in this respect. Arguably, it’s one way of achieving some levelling of the playing field!
2️⃣ Sector Snippets:
Landlords were hit with a two percentage point increase in the property income tax rate in this year’s Budget - to 22% for basic rate taxpayers, 42% for higher rate taxpayers, and to 47% for those paying the additional rate. The Times notes here that Savills data indicate that the additional surcharge could cost the average tax-paying landlord an extra £215 p.a. - or £167 per entity if they won the property through a company. It is not welcome news on the face of it for BTL lenders. However, the listed lenders that have a significant presence in the BTL space (i.e., OSB, PAG, SHAW) are heavily weighted towards professional landlord lending and this latest move in rates could stimulate more private landlords to incorporate (a trend that has been underway for years) which could slightly increase the addressable market for lending purposes.
Ashley Alder, FCA Chair, spoke this week on his reflections in a risk rebalancing context here. Alder displays measure in his commentary - notably remarking that “risk is not to be avoided but is essential for fostering investment and innovation”, which is a grown-up perspective in my view that we do not always see. Alder also picked up on private credit, noting that more data is necessary from a supervisory standpoint in relation to this “relatively opaque” pocket of the market.
3️⃣ Company Snippets:
Barclays (BARC) announced on Thursday 27th November that its £1.0bn share buyback programme (announced at the stage of the 2Q25 results) has completed (VWAP paid per share of 414.9p) and that its programme to buy back £500m of stock (as announced at the stage of the 3Q25 results) would commence that same day.
Sky News reported on Thursday 27th November here that the remaining contenders for the HSBC (HSBA) Chair position (who are understood to be George Osborne and at least one other candidate, thought to be Kevin Sneader - with Naguib Kheraj reported to have pulled out of the process in recent days) have been asked to pitch to the Board next week. Separately, an interesting piece questioning the strength of Osborne’s experience in the context of the position appeared in The Times here on Friday - the article also notes that former HSBA CEO Stuart Gulliver was also approached in relation to the Chair role.
NatWest Group (NWG) hosted an Investor Spotlight session on Retail Banking on Tuesday 25th November - slides here and transcript here. This was a constructive session which highlighted the many opportunities for Retail Banking growth; the interconnections between the Retail Banking division and the PBWM and C&I divisions and how management is seeking to drive improved cross-pollination across the group; how NWG is driving operating efficiencies and leveraging its AI investments to strengthen the customer proposition and achieve cost reduction; and divisional (and group) management’s intense focus on unit economics (much discussion on divisional and product RoEs) and future capital optimisation actions. Separately, Reuters reported on Friday here that sources have noted to the news agency that NWG is in exclusive discussions to sell its 85% shareholding in the workplace pension provider Cushon to Willis Towers Watson - this followed an earlier report on Sky News here, breaking the story.
OSB Group (OSB) announced on Tuesday 25th November the results of its cash tender offer for its £150m 6.0% AT1s - following settlement of the offer, £17.1m of securities will remain outstanding. Separately, it is also noteworthy that Charter Savings Bank (OSB) reappeared in Moneyfacts’ best buy tables this week with its 4.25% AER term product account taking pole position in the 30-day notice charts. Finally, OSB issued a RNS on Wednesday 25th November noting that JPM AM’s shareholding in the bank is now 5.29% (previously disclosed shareholding: 5.28%) following a transaction on Friday 21st November.
Paragon Development Finance (PAG) announced on Thursday 27th November a significant increase to its maximum loan size from £35m to £60m. The increased loan limit will enable PAG to support larger and more complex development projects. PAG noted at the stage of its 1H25 results that prospects for its Development Finance division “…appear positive, particularly if the UK Government adopts the kinds of pro-development policies it has promised. The business continues to develop, extending the types of opportunity it can address.”. It will be interesting to learn more about PAG’s volume ambitions over the coming years in a Development Finance context at its FY25 results next week (on Wednesday 3rd December).
Revolut confirmed that its latest fundraising implies a $75bn valuation for the firm’s equity in a press release on Monday 24th November here. This puts the valuation of Revolut above that of NWG, on a par with that of LLOY, and within touching distance of BARC.
Barclays announced the post-stabilisation period in trading of Shawbrook (SHAW) stock and the exercise of the over-allotment option (13.67 million shares at 370p each) on Friday 28th November. This means that SHAW’s free float is now c.21% (i.e., c.£400m of tradeable equity).
🇮🇪 Ireland Unvarnished - My Top Picks 🇮🇪
1️⃣ AIB Group in the spotlight:
Lots of news in an AIB Group (AIBG) context this week. It was announced earlier this week that the bank has raised €1bn from a fresh green Tier 2 issuance (a green bond) at a keen 3.75% coupon (with pricing tightening by 30bps relative to IPT of 4.05%). I provided the following comments to GlobalCapital on Tuesday afternoon in the wake of the transaction: “The strong demand for AIB’s Tier 2 issuance likely reflects a combination of factors in my view - AIB operates in a very concentrated market in an economy that is churning out strong growth, almost 90% of its Irish deposits rest in overnight accounts earning almost nothing, and the very high capital generation doesn’t make its way back to shareholders on a timely basis. On this last point, AIB is essentially swimming in capital - with a pro forma CET1 capital ratio of 18.4% at end-September if we adjust for in-year capital generation and the agreement to cancel the warrants. Indeed, AIB looks set to hold significant levels of excess capital for quite some time which is undoubtedly a comfort factor for Tier 2 investors.”.
Continuing with the green theme, the bank held its 9th Annual Sustainability Conference on Thursday with the CEO noting that “The theme of today’s Sustainability Conference, ‘Where our shared ambition meets action’, reflects our journey in AIB, where our commitment to sustainability is unwavering. We see it as a business imperative, key to a more resilient and competitive economy. We will continue to innovate, to collaborate and to support our customers and communities on the journey to a more sustainable future. The task ahead is demanding, but our shared ambition remains undiminished.”. The press release published on the morning of the conference called out a number of areas in which AIBG has made a significant impact in relation to these ambitions, which are commendable. Amidst all the PR fanfare, one point of note within the press release that grabbed my attention was the comment that AIBG’s Climate & Infrastructure Capital unit delivered new lending of €1bn in 9M25, of which 64% was in Europe and the UK - I have recently remarked that, based on financial disclosures within the 1H25 report and based on my understanding that the blended average risk weight of that book is c.83%, it is arithmetically clear that this unit is a drag on group returns.
Finally, The Irish Times reports this weekend here that Goodbody (AIBG) is understood to be close to agreeing a deal to acquire a boutique Dublin-based asset management business, BCP Asset Management following an exclusivity period - with sources noting to the newspapers that BCP is worth €12-14m. The Irish Times reported in February that BCP has c.€3bn of client assets under management (AUM) and posted revenues of c.€8m in FY24. My view is that it makes considerable sense for Goodbody to scale up in this specific domain given the strength of divisional management within its Asset Management business.
2️⃣ Sector Snippets:
The Central Bank of Ireland (CBI) published Money and Banking Statistics for October 2025 on Friday 28th November here. Key points to flag: 1) Loan Volumes: Mortgages for house purchases were +€438m in October 2025, continuing the positive trend observed since May 2024. Annual growth in lending to households to end-October was €5.1bn, +4.9% y/y. Net lending to non-financial corporates (NFCs) was +€619m in October - annual growth to end-October was +€783m, +2.7% y/y. 2) Deposits: Annual growth in household deposits to end-October was €11.3bn (€4.2bn term, €6.5bn overnight, €0.6bn notice). Annual growth in NFC deposits to end-October was +€2.1bn, primarily driven by growth in term deposits. All in all the data is broadly as expected and points to continued strongly positive conditions in both a loan growth and a deposit funding build context for the banking industry.
Banking & Payments Federation Ireland (BPFI) published its Mortgage Approvals Report for October 2025 on Friday 28th November - press release here and report here. The strong growth continues with the value of mortgage approvals +4.0% m/m and +4.2% y/y, which bodes well for Irish banks’ origination volumes in the months ahead. BPFI CEO Brian Hayes noted: “Our latest report reveals that there were over 45,500 mortgage approvals in the first ten months of 2025 amounting to almost €14.6 billion. This marks the highest year-to-date volumes since 2022 and the highest values since the data series began in 2011.”.
3️⃣ Company Snippets:
Bank of Ireland Group (BIRG) announced a range of initiatives to support new housing supply on Thursday 27th November. One particular point of note is that the bank will pilot a new lending product to support homeowners trading down. This product will be structured like a traditional bridging loan, will be available at up to 60% LTV (on current valuation), and will be priced at a 7% variable rate. It is a welcome initiative as was the bank’s decision to convene a group of private sector representatives to help inform its initiatives and to exert some soft pressure on government in a constructive manner - for example, BIRG has written to the government to propose a regular housing finance forum where senior officials and private sector leaders can exchange insight, discuss latest market developments, and provide feedback with the goal of working together to sustainably increase home building.
🇪🇺 Europe Unbound - My Top Picks 🇪🇺
1️⃣ European central bankers making competing proposals on capital buffers
Bloomberg published a useful piece on Tuesday 25th November here setting out how various European central bankers - Bank of Spain Governor Jose Luis Escriva, Bank of France Governor Francois Villeroy de Galhau, and Bundesbank Executive Board Member Michael Theurer - have made different recommendations on how to simplify various capital buffers. This is in the context of the upcoming submission that the ECB’s High-Level task Force on Simplification is expected to make to the ECB before the end of the year. However, it seems to me that Europe is set to become less competitive relative to the US and the UK - indeed, the article notes that European banks have privately indicated that the do not expect much relief from the effort. It is worth further noting that ECB Vice President Luis de Guindos threw cold water on the prospect of a lighter burden for banks - commenting to Bloomberg Television on Wednesday that “We have some red lines” (see Bloomberg article here for more detail). SRB Board Member Karen Braun-Munzinger is also worth reading here on Thursday 27th November, and notes that “We see no short cut to simplify the capital stack and particularly MREL composition; rather, the debate requires a holistic assessment given that each design feature currently delivers specific policy outcomes. Any attempt to simplify the capital stack must consider how all these elements interact in practice, ensuring that changes to one layer do not undermine the effectiveness of the others. Further, cooperation and trust are critically essential for successful crisis management – our framework must remain firmly anchored in the internationally agreed standards that underpin that cooperation across jurisdictions.”.
2️⃣ Other Snippets:
The ECB published its Financial Stability Review on Wednesday 26th November. In short, it sees: i) stretched asset valuations in increasingly concentrated asset markets raising the risk of sharp price adjustments; ii) that fiscal challenges in some advanced economies could test investor confidence; iii) that exposures to tariff-sensitive firms and stronger funding ties with non-banks could strain euro area banks during periods of economic or market stress; and iv) that the euro area banking sector is resilient, with strong profitability and ample capital and liquidity buffers. Press release here, slide deck here, and report here.
Pierre Cipollone, Member of the Executive Board of the ECB, spoke on Tuesday 25th November at the Central Bank of Ireland’s Financial System conference on the role of tokenised central bank money as a response to the threat to the monetary order posed by stablecoins. Slide deck here.
🌎 Global Unpacked - My Top Picks 🌎
1️⃣ US leveraged loan sales under pressure
Bloomberg reported on Monday 24th November here that US leveraged loan sales are coming under pressure as demand is lacklustre, forcing some borrowers to cancel deals and others to sweeten terms. Average loan prices have been falling. These trends could, in my view, drive writedowns in exposed banks’ leveraged loan portfolios over the coming quarters.
2️⃣ Other Snippets:
US regulators finalised a plan this week to ease the enhanced supplementary leverage ratio (SLR). While the changes serve to reduce bank capital requirements, the final rule does not specifically exclude US Treasuries from the calculation.
I penned a basic explainer piece on valuing banks in the Business Post on Friday 28th November (in the context of the reportedly wide divergence in analysts’ views on the value of PTSB, which is the subject of a formal sale process) which you can access here.
📆 The Calendar 📆
Look out for these in the week ahead:
🇬🇧 Mon 1st Dec (09:30 BST): Bank of England (BoE) Money and Credit Statistics and Effective Interest Rate Statistics - Oct 2025
🇬🇧 Tue 2nd Dec (07:00 BST): Bank of England (BoE) Financial Stability Report (Dec 2025) and Financial Policy Committee (FPC) Record (Dec 2025) [Note that the FPC is due to publish the outcome of its Capital Framework Review, which, in my understanding, will likely then be open for a consultation period]
🇬🇧 Wed 3rd Dec (07:00 BST): Paragon Banking Group (PAG) FY25 results (for the 12 months to 30th September 2025)
🇪🇺 Wed 3rd Dec (09:00 BST): European Central Bank (ECB) Euro area bank interest rate statistics - Oct 2025
🇬🇧 Wed 3rd Dec (09:30 BST): Paragon Banking Group (PAG) FY25 Investor / Analyst Presentation (at the offices of UBS, 5 Broadgate, London EC2M 2QS)
🇮🇪 Wed 3rd Dec (11:00 BST): Central Bank of Ireland (CBI) Monthly Card Payment Statistics - Oct 2025
Also note that the FT Global Banking Summit 2025 takes place at Convene Sancroft, St. Paul’s, London from Tuesday 2nd December through Thursday 4th December with a lot of big names in the line-up - I am looking forward to attending
⚠️ Disclaimer ⚠️
The contents of this newsletter and the materials above (“communication”) do NOT constitute investment advice or investment research and the author is not an investment advisor. All content in this communication and correspondence from its author is for informational and educational purposes only and is not in any circumstance, whether express or implied, intended to be investment advice, legal advice or advice of any other nature and should not be relied upon as such. Please carry out your own research and due diligence and take specific investment advice and relevant legal advice about your circumstances before taking any action.
Additionally, please note that while the author has taken due care to ensure the factual accuracy of all content within this publication, errors and omissions may arise. To the extent that the author becomes aware of any errors and/or omissions he will endeavour to amend the online publication without undue delay, which may, at the author’s discretion, include clarification / correction in relation to any such amendment.
Finally, for clarity purposes, communications from Seapoint Insights Limited (SeaPoint Insights) do NOT constitute investment advice or investment research or advice of any nature – and the company is not engaged in the provision of investment advice or investment research or advice of any nature.