Financials Unshackled | Weekly Briefing of 23rd Nov 2025 (UK Bank Taxes 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 23rd November 2025 - your weekly pack for critique and curation of key banking developments over the last week. It was a relatively quiet week again in the context of major newsflow so I’m keeping this note relatively short.
✂️ What’s In This Note ✂️
In-Depth: UK bank taxes
UK: EY ITEM Club Outlook for Financial Services; Deposit protection limit; CBG 1Q26 trading update thoughts; LLOY acquisition of Curve; Nationwide 1H25 results thoughts; OSB capital management; shareholding changes of note incl. director transactions
Ireland: Central bank Financial Stability Review; BPFI Mortgage Market Profile; New Finance Minister; Rathbones to enter Irish wealth management space; Dilosk FY24 results; PTSB sale process bidder interest; shareholding changes of note
Europe: ECB SREP results; ECB Supervisory priorities for 2026-28; Bundesbank proposal in relation to capital requirements
Global: Bank crypto holdings; AI and headcount
To unshackle your understanding of the week’s banking developments please read on to explore critiques, curated insights, and your calendar for the week ahead.
🔎 The Critique 🔎
In this section I dissect the week’s most significant banking development(s) / theme(s) of interest across key regions as appropriate, cutting through the noise to get to the crux of the issue.
🇬🇧 Bank taxes - will she or won’t she? 🇬🇧
What Happened?
There has been much speculation in the last week that the Chancellor may indeed move to increase bank taxes in the Budget on Wednesday 26th November. This follows an article in The Telegraph on Monday here noting that “…Reeves is considering launching a last-minute raid on banking profits in the Budget, The Telegraph understands.” - and despite a report in the FT of 5th November which noted that a number of people close to the Chancellor’s thinking indicated that Reeves is “not minded to” increase the tax burden for banks, with raising taxes on banks said to be “a long way down” the Chancellor’s list.
Unshackled Perspectives
I have previously commented that, while there would likely be some residual nervousness on bank taxes, given that the FT article appeared just three weeks out from the Budget as well as the fact that the comments appeared very strong, that it did look like the balance of probabilities suggests that no increase in bank taxes (including the idea of an excess reserves tax) is on the agenda. However, Reeves has been careful not to rule out anything and one can see how the temptation might not be resisted.
The fact that the FCA motor finance consultation shall remain open beyond the Budget is, in my view, also not unhelpful to the lenders in this vein. I also suspect that Reeves harbours some concerns to the effect that the Leeds Reforms may prove to be something of a damp squib in the end despite the hullabaloo surrounding them at the time. CityAM reported recently that Simon Ainsworth, Banking Analyst at Moody’s, told the newspaper that the package was “not really going to be moving the dial to a material extent for UK banks” - and I suspect that point has been made by various banking executives to Reeves too. Indeed, Reuters reported on Tuesday here that the BoE is set to resist major changes to the ringfencing regime. If so, then Reeves is likely to be more inclined to let the lenders off the hook when it comes to tax increases.
On the other hand, expectations are high that bank capital requirements will be materially reduced by the FPC when it announces the results of its Capital Framework Review on Tuesday 2nd December. Additionally, it is difficult to know what pressures Treasury may be exerting on the FCA in the context of the motor finance redress scheme. Reeves may feel like a slight increase in the tax burden - potentially of a temporary or one-off nature - is a quid pro quo. Indeed, the FT reports this weekend here on the bounceback in UK bank valuations (though implied CoE is still well >10% I would add) and asks the question are they now a tax target? I was pleased to contribute to the article.
Notably, it appears to me that the large lender executives have all gone noticeably quiet on the matter in recent weeks which leads the mind to speculate as to why that is. However, OakNorth CEO Rishi Khosla did note to the Mail on Sunday (as reported here on This is Money) that a new levy on bank profits would leave less capital to lend to growing firms. Let’s see what Wednesday brings.
📌 The Curation 📌
In this section I collate select key banking developments across key regions, cutting through the noise to get to the nub of the issue in cases.
🇬🇧 UK Unfiltered - My Top Picks 🇬🇧
1️⃣ Sector Snippets:
EY ITEM Club published its latest Outlook for Financial Services on Monday (see here). It expects: i) UK mortgage lending growth to slow to 2.8% in 2026 from 3.2% this year, as affordability challenges and slowing real income growth impact homebuying demand, before picking back up to 3.2% in 2027; ii) UK business lending to grow 5.1% this year – up on 2.9% in 2024 – slow to 4% in 2026, then tick up in 2027 to 4.7%; and iii) UK consumer credit lending to grow 5.6% in 2025 - down from 6.4% last year - and remain steady in 2026 and 2027.
The PRA has confirmed that the deposit protection limit, which applies to the Financial Services Compensation Scheme (FSCS), will protect up to £120k of a depositor’s money should their bank, building society or credit union fail - up from the £85k limit set in 2017. See PRA News Release here and Policy Statement PS24/25 here.
2️⃣Company Snippets:
Close Brothers Group (CBG) stock saw a little selling pressure in the aftermath of its 1Q26 trading update for the three months to 31st October on Thursday. While financial performance was solid and there were no great surprises, there was nothing to excite.
The only negative as I saw it was some further shrinkage in the loan book in the quarter (-£0.1bn q/q to £9.4bn) “reflecting continuing impact on demand from the uncertain external environment” with CBG further pointing to “an increase in the level of repayments and lower volumes in Property Finance and Invoice Finance”. This latter point on lower volumes arguably contrasts somewhat with the positive soundings in the FY25 update in relation to broadening the product offering in Property Finance and winning market share in Invoice Finance - though it is just one quarter and those were broad soundings at the stage of the FY25 results. However, I suspect we could see FY26 consensus for net loans of £9.7bn nudge down a bit even though it is very early in the financial year.
Elsewhere, CBG reconfirmed FY25 guidance - with the 1Q26 NIM print of 7.1% flattered by temporary higher behavioural fee income (meaning FY26 guidance for NIM of slightly <7% is maintained), the delivery of cost savings remains on track, credit quality is consistently strong, and the £13.0m operating loss in 1Q is in line with guidance for a FY26 operating loss of c.£50m. As expected, CBG booked £135m of incremental provisions with respect to the motor finance redress scheme and this was the main factor underpinning the c.90bps of CET1 capital ratio depletion in the quarter (to 12.9%).
Lloyds Banking Group (LLOY) announced the acquisition of Curve - a London-based fintech that operates an innovative digital wallet platform - on Wednesday 19th November. The price was not disclosed but media reports indicate it was £125m. In ay event LLOY’s RNS confirmed that the deal, which is expected to complete in 1H26, is not expected to have a material financial or capital impact on the Group. I noted in Financials Unshackled Issue 53 here that there are likely to be a number of potential strategic benefits for LLOY in the context of the then reported possible deal - acceleration of its digital payments strategy, a rival to Apple especially as the latter faces pressure to open up its Apple Pay systems to third-party developers, and customer data and insights capture. Indeed, LLOY’s RNS on Wednesday makes it clear that the group sees the addition of Curve as a valuable enabler in a customer experience context within the app as well as providing expanded payment flexibility and procuring rich data that will serve to facilitate an improved personalised experience (indeed, management talked a lot about personalised services at the recent Investor Seminar on AI). It has been a bumpy road to achieve a transaction given reported discord amongst the Curve shareholder base. Indeed, in what could be something of a curveball, Sky News reported on Friday afternoon here that Curve’s largest shareholder IDC Ventures issued a petition in the High Court on Friday seeking to overturn the agreed sale to LLOY.
Nationwide Building Society reported 1H25 results (for the six months to 30th September) on Thursday. Some key take-aways are:
Strong underlying PBT - £1.02bn when integration costs are excluded, up from £959m in prior year period - though prior year period excludes Virgin Money.
It’s not all about profits in any event - interest rates for depositors were 31% (63bps) higher than market average in the period. Nationwide delivered total member value of £1.2bn (H1: 24/25 £1.3bn), comprising £780m member financial benefit and £409m Fairer Share.
Growth in mortgage market share to 16.3% from 16.2% in six months to end-March with net lending of £4.7bn in the 6-month period; growth in unsecured personal lending balances of £0.4bn in the period to £11.5bn; though business lending balances decreased £0.1bn h/h due to increased competition.
Retail deposits +£5.3bn to £266.0bn in the six-month period and decent growth in business deposits too - which were +£0.9bn in the six-month period to £22.0bn.
NIM of 1.58% in the period was -2bps h/h (Nationwide’s structural hedge is proportionally lower than large cap bank peers so it doesn’t have the same tailwind at play in that vein). Mortgage spreads on new business were 58bps in the period and the blended average spread on the mortgage pipeline is c.60bps. The CFO also noted that deposit margins are expected to continue to compress.
Credit quality remains very strong - and arrears reduced slightly in the period.
Making significant progress from a VMUK integration perspective (Part VII transfer expected to complete in April) - integration running ahead of schedule and at a lower cost than had been expected, which is testament to the strength of the management team.
Continues to invest heavily in technology despite extended Branch Promise - customer service metrics are especially strong.
Strong CET1 capital ratio of 18.4% at end-September but down 70bps h/h. Notably, an increase in the risk weights applied to Virgin Money’s IRB mortgages following PRA feedback (which saw its average risk weight rise by 5pps to 21%) drove 60bps of the decline. Nationwide had its hybrid IRB models approved in 2024 and is working with the PRA on VMUK’s IRB models - given the risk weight of 15% on Nationwide’s models versus VMUK’s now 21%, it feels like some of this “temporary adjustment” should just be temporary but the VMUK hybrid model approvals timeframe remains unclear.
OSB Group (OSB) announced on Monday a cash tender offer for its £150m of 6.0% AT1s ahead of the First Reset date of 7th April 2026 - which would see the coupon on the notes reset to “the sum of 5.393 per cent. per annum and the applicable 5-year Gilt Rate” according to the AT1 Offering Memorandum of 5th October 2021. This move is not unexpected and OSB swiftly moved to announce (on Friday) a fresh £150m AT1 issuance at a coupon of 7.75% - with the spread of 380bps representing a significant tightening in pricing relative to its inaugural 2021 issuance which completed at a spread of 539bps. Sound capital management and a good result on the new issuance.
3️⃣Shareholding changes of note:
Lloyds Banking Group (LLOY) Director Share Sales: i) Andrew Walton (Chief Sustainability Officer and Chief Corporate Affairs Officer) sold 597,196 shares on Wednesday 19th November at a price of 88.13p per share for gross proceeds of just over £525k; and ii) Chirantan Barua (CEO, Insurance, Pensions & Investments) sold 86,799 shares on Thursday 20th November at a price of 88.42p per share for gross proceeds of just over £75k.
NatWest Group (NWG) Director share purchases: Joshua Critchley (INED) purchased 16,000 shares on Monday 17th November at a price of 598.4p per share for an outlay of just over £95k.
OSB Group (OSB): JPMorgan Asset Management now 5.27% following transactions on the 14th and 18th of November (previously disclosed shareholding: 5.21%).
🇮🇪 Ireland Unvarnished - My Top Picks 🇮🇪
1️⃣ Sector Snippets:
The Central Bank of Ireland (CBI) published Financial Stability Review 2025 II on Monday - document here. The FSR notes that, although global trade policy uncertainty has reduced since the last FSR, risks facing the financial system remain elevated and that the Irish economy is particularly exposed to international developments. These are valid points and the CBI took what were in my view measured decisions to preserve the CCyB at 1.5% (reaffirming that it remains alert to the potential need to move the buffer in either direction) and to retain the O-SII buffer for the domestic listed banks at their existing levels. The CBI has, in my view, exhibited a pragmatic approach to setting bank capital requirements since mid-2023 - and, anecdotally, I hear that the relationship between the banks and the regulator has improved considerably in recent years. There appears to be an openness to tackling some of the onerously high risk weights too (with PTSB’s IRB models review in mind here) but there is a long road to travel on that still as I see it. Separately, the CBI notes that the macroprudential mortgage measures have ensured that lending at high LTIs has remained contained. While this is true, the CBI’s position is very stringent relative to that of the UK, for example (3.5x LTI limit with some exceptions versus 4.5x in a UK context, where, despite higher base rates, there was some meaningful loosening in requirements this year) - and, in my view, constrains first-time buyers in particular from getting on the housing ladder. That said, the most significant issue of all is clearly the lack of housing supply.
Banking & Payments Federation Ireland (BPFI) published its ‘Mortgage Market Profile’ document for H1 2025 on Friday (press release here and report here). It’s worth a read as it shows the changing profile of the Irish mortgage market with a focus on the rise in the number of solo borrowers particularly - consistent with global trends (with The Economist dedicating its front cover of 8th November to ‘The relationship recession’).
Simon Harris has taken over as Finance Minister in the wake of Paschal Donohoe’s decision to take up a senior position at the World Bank. Donohoe earned enormous respect for his diplomatic strengths and his prudent management of the public finances during his tenure as Finance Minister and he will unquestionably be a very hard act to follow. That being said, he did avoid a lot of hard decisions too in my view - ones that would have demonstrated real vision and courage. The PTSB piece below touches on my sense of what Harris’s position is likely to be.
The Business Post reports here that wealth manager Rathbones is set to enter the Irish market. This news follows hot on the heels from the news that IG is also entering the Irish market. The wealth management space is becoming more competitive - which will exert some pressure on Goodbody’s (AIBG) and Davy’s (BIRG) share ambitions.
2️⃣Company Snippets:
The Irish Independent picked up on Dilosk’s FY24 results here - with the non-bank lender delivering profits of €5.5m< +80% y/y, according to the article.
The Sunday Times reports here that Centerbridge and Lone Star are expected to participate in the Permanent TSB (PTSB) sale process - with Centerbridge reported to be “believed to have been running the rule over PTSB since late spring and many believe that it was close to appointing advisers to explore a bid, a move that ultimately may have prompted the Irish bank to appoint Goldman Sachs and kick-start the process”. My sense of the new Finance Minister Simon Harris is that he will likely ‘play it safe’ in this specific context at least and avoid courting any controversy. I suspect he is unlikely to be comfortable selling the State’s shareholding in PTSB to private equity - even if PE buyers are prepared to accept considerable conditionality in terms of employment and branch commitments. The article also notes that indicative offers will be due in the early new year with the process expected to complete in 1H26 (we already knew the latter and it is unsurprising to learn of the former). It will be interesting to see if there is ample trade buyer interest as achieving a sale of PTSB could be dependent on that.
3️⃣Shareholding changes of note:
AIB Group (AIBG): FIL now 3.04% (previously disclosed shareholding: 3.08%) following a transaction on 18th November.
🇪🇺 Europe Unbound - My Top Picks 🇪🇺
1️⃣ ECB SREP results show broad stability in capital requirements
The ECB published the aggregated results of its 2025 Supervisory Review and Evaluation Process (SREP) for ECB-supervised banks on Tuesday - press release here. It is welcome to see that overall CET1 capital requirements and guidance and Pillar 2 requirements remained broadly stable at 11.2% and 1.2% respectively - while Pillar 2 guidance for 2026 decreased from 1.3% to 1.1%. The ECB notes again that banks show robust capital and liquidity positions and strong profitability. The reality, however, is that the EZ bank capital framework in overall terms will soon likely see EZ banks operating at a disadvantage to US and potentially UK-based lenders. We are still waiting to see what comes in a US context but it was interesting to note that Federal Reserve Governor Stephen Miran’s comments reported in Bloomberg here on Wednesday: “For many years, financial regulation mostly moved in one direction, increasingly restricting the banking sector”, further noting that rules went too far after the financial crisis. In the UK, expectations have been building that we will see a material softening in bank capital requirements when the FPC publishes the outcome of its Capital Framework Review on Tuesday 2nd December.
2️⃣ Other Snippets:
The ECB also set out its Supervisory priorities for 2026-28 this week here. These are: i) strengthening banks’ resilience to geopolitical risks and macro-financial uncertainties; and ii) strengthening banks’ operational resilience and fostering robust ICT capabilities.
Bloomberg reports on Friday here that the Bundesbank is proposing giving European banks more than 5 years to overhaul how they use AT1 debt as it seeks to salvage a controversial proposal to streamline banks’ capital structure. As a refresher, Bundesbank Executive Board member Michael Theurer, earlier this year, called out three potential reforms which could reduce complexity - using only CET1 capital for meeting going concern capital requirements, the separation of capital and resolution requirements, and the merger and simplification of capital buffers. There is some sense in the proposals but it is also feared that there could be unintended consequences outside of Germany with some banks potentially facing a CET1 shortfall.
🌎 Global Unpacked - My Top Picks 🌎
1️⃣ Just a few snippets this week:
The FT picked up this week here on comments made by Erik Thedeen, Chair of the Basel Committee on Banking Supervision (BCBS), that a different approach is needed on the global rules for banks’ crypto holdings following the US and UK’s refusal to implement them.
Interesting piece in The Financial Brand on Wednesday here on how AI will impact bank headcount, picking on comments made by Wells Fargo Chairman & CEO Charlie Scharf that “Anyone who sits here today and says that they don’t think they’ll have less headcount because of AI either doesn’t know what they’re talking about, or is just not being totally honest, because ‘it’s not the right thing to say’.”. Good to see he’s not mincing his words. While banks will naturally be hesitant to put a number on it, AI is set to generate substantial cost savings. What is key is that banks move at pace to invest in and implement the technologies so as not to fall behind peers.
📆 The Calendar 📆
Look out for these in the week ahead:
🇮🇪 Tue 25th Nov: Central Bank of Ireland (CBI) Financial System Conference
🇬🇧 Tue 25th Nov (15:30 BST): NatWest Group (NWG) Investor Spotlight: Retail Banking
🇬🇧 Wed 26th Nov (c.12:30 BST): UK Budget - Chancellor’s Statement
🇮🇪 Thu 27th Nov: AIB Group (AIBG) 9th Annual Sustainability Conference
🇪🇺 Thu 27th Nov (09:00 BST): ECB Monetary developments in the euro area - Oct 2025
🇮🇪 Thu 27th Nov (11:00 BST): Central Bank of Ireland (CBI) Household Wealth - Q2 2025
🇮🇪 Fri 28th Nov (11:00 BST): Central Bank of Ireland (CBI) Money & Banking Statistics - Oct 2025
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