The numbers from Alvarez & Marsal are unusually concrete. U.S. and UK bank deregulation has handed the largest balance sheet lenders on both sides of the Atlantic a combined $2.9 trillion in new lending capacity. Banks are already putting it to work.
The consulting firm published its May 2026 edition of the Bank Deregulation Primer on May 26, examining capital requirement trajectories across 19 institutions: eight U.S. banks, three UK banks, seven EU banks and UBS as the sole remaining Swiss global systemically important bank. The findings document a structural divergence in how the world’s major banking markets are approaching capital regulation – and what that divergence means for lending volumes, profitability and competitive positioning across each jurisdiction.
U.S. and UK Banks Gain Lending Capacity
For U.S. banks, the deregulatory agenda could release 160 basis points of Common Equity Tier 1 capital together with 113 basis points of leverage relief. The combined effect, according to the report, is enough to support a $2.5 trillion expansion in asset capacity across eight large institutions. Those institutions include JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs, Wells Fargo, Morgan Stanley, BNY and State Street. That represents an approximate 15% increase in their combined balance sheet headroom.
For UK banks, an anticipated 75 basis points of CET1 relief is expected to unlock $400 billion in additional asset capacity. The Bank of England’s competitiveness agenda is under consideration for further reforms to leverage ratios and capital buffers, which could expand that figure further.
“U.S. banks are already deploying substantial amounts of newly available capital into lending growth, acquisitions, shareholder distributions and technology investment,” said Fernando de la Mora, co-head of Alvarez & Marsal’s EMEA Financial Services practice, in an announcement of the report on May 26.
EU and Swiss Banks Face a Different Calculation
The trajectory in continental Europe runs in the other direction. Under Capital Requirements Regulation 3, EU banks will see CET1 requirements rise by an estimated 109 basis points. Switzerland is considering proposed reforms that would increase CET1 requirements for UBS by as much as 350 basis points. By contrast, the deregulatory benefit flowing to U.S. and UK institutions is already visible in earnings performance.
PYMNTS reported that leverage ratio relief alone has added an estimated $1.3 trillion in combined fresh lending capacity to the largest U.S. and UK institutions. “The divergence between regulatory regimes is becoming increasingly visible in profitability, market share and valuations,” de la Mora said. “U.S. banks are benefiting from lower capital requirements far more quickly than expected, while Europe remains focused on resilience.”
What Freed Capital Requires From Lenders
Capital availability creates lending capacity. However, it does not by itself generate loan volume. Banks deploying $2.9 trillion in new asset capacity need the origination infrastructure to convert that capacity into funded loans at scale and speed.
The Alvarez & Marsal report marks the clearest data-backed articulation yet of a competitive divide that is no longer theoretical. On one side, U.S. and UK balance sheet lenders with capital to deploy. On the other, EU institutions that must do more with less. Both positions create a direct and measurable demand for modern lending infrastructure at scale.
For institutions still operating manual or fragmented loan origination workflows, the ability to absorb higher application volume, reduce time-to-decision and maintain compliance under a tightening AI governance framework will determine how much of that capacity actually reaches borrowers. EU banks face a structurally different version of the same problem. Tighter capital requirements mean each basis point of capital must generate more origination output per loan – an efficiency pressure that accelerates demand for automated, purpose-built lending platforms.
