Steve Pateman, chief executive of Shawbrook Bank, told Bridging & Commercial that the decision to leave the EU had been met with more optimism and balance than overreaction. 

“The decision to leave the EU, once implemented, also presents an opportunity to level the playing field in respect of the amount of capital held by the smaller banks. 

“Current EU-determined regulation requires smaller banks to hold comparable headline levels of capital to their larger peers, but with significantly higher risk weights; a more balanced approach would help smaller banks and building societies compete more effectively and provide more credit to the economy.”

Rishi Khosla, CEO and co-founder of OakNorth, felt that current EU legislation took a ‘one size fits all’ approach to banking regulation.

“Large banks pose a systemic risk to the UK economy, small banks such as OakNorth do not, yet we still have to adhere to the same capital and regulatory reporting requirements. 

“Voting to leave the EU creates an opportunity to fix this issue and make both the tax and regulation more proportionate for smaller banks like us.”

Rishi also hoped leaving the EU would see the 8% bank corporation tax surcharge, which applies to all banks, withdrawn or at least reduced for banks of a certain size.

“This was a retrograde step in terms of stimulating more competition in the sector, as ramping up taxation on profits means that OakNorth and other small banks will have less capital to reinvest in their businesses and less retained capital to lend to businesses. 

“In leaving the EU, we hope to see this regulation withdrawn or reduced for banks below a certain size. 

“This will help create a more competitive and diverse banking system that better supports British business and the economy.”

Steve and Rishi’s comments come after Andrew Tyrie, chairman of the Treasury Committee, said Brexit could create opportunities for challenger banks.

“Current EU legislation could be placing smaller banks at a disadvantage. “The Bank of England and the government both now need to consider whether the opportunity afforded by Brexit could enable the development of a regulatory regime less prejudicial to small and challenger banks.”

Mr Tyrie has long been critical over the regulatory barriers for challenger banks and his comments came as a response to a letter from challenger banks which urged the government to take a more proportionate approach to the regulation of smaller banks.

“This will help smaller banks and building societies [to] compete more effectively and provide more credit to the economy, which will be useful especially should the dominant incumbents reduce their lending appetite in a post-Brexit environment,” claimed the challenger banks.

“The EU referendum result, all things being equal, should allow … HM Government to determine its own strategy for the regulation of banks. 

“We believe it would be helpful for the CMA [Competition and Markets Authority] to take account of the referendum outcome and provide firm recommendations for HM Government to take in a post-Brexit environment.”

The letter from the challenger banks was signed by Aldermore Bank, Charter Savings Bank, Hampden and Co, Metro Bank, OneSavings Bank, Secure Trust Bank and Shawbrook Bank.