European fears that UK regulatory freedom will be used to tilt the playing field to the City's advantage look misplaced....

The Prudential Regulation Authority has chosen to fall out of line with European counterparts with its decision to maintain the treatment of software intangibles as a deduction from capital. The news is disappointing for UK banks that may have hoped that their investment programmes in technology might be able to benefit from more generous capital treatment. 

On the other hand, the departure does suggest that the Bank is prepared to take a different path when this makes sense. The PRA has been very clear that it will only seek to rebuild the countercyclical buffer when the sector has been able to navigate the perils of Brexit and the pandemic. The City will also be hoping that the path which is taken creates a regulatory environment which allows the sector to thrive.