Prudential Regulation Authority Lifts Capital Distribution Ban for Large U.K. Banks

The Prudential Regulation Authority, or PRA, in the United Kingdom has removed all capital distribution restrictions on large U.K. banks. We think the move was well-anticipated by the market and should have a minimal impact on share prices of the U.K. banks we cover. However, it does support our view that Barclays, Lloyds, and NatWest are adequately capitalized. We expect all three banks to give an update on their capital distribution plans during the upcoming second-quarter earnings releases. We estimate the banks have approximately 6% (Barclays), 13% (Lloyds), and 29% (NatWest) of their current market capitalization in excess capital available for distribution.