UK banks adjust capital ratios by 50% in response to requirements.
The UK's Financial Services Authority sets capital requirements for banks and building societies to manage risks. A study looked at how changes in these requirements affect the capital ratios of these institutions. Banks tend to adjust their capital holdings by about 50% in response to increased requirements, but only 20% for decreases. Building societies, on the other hand, adjust their capital ratios by around 20% regardless of whether the requirements increase or decrease.