UK regulator says banks are trimming AI exposure as alarm grows
For the chief risk officer at a US regional bank
UK banks have begun trimming exposure to artificial intelligence, Katharine Braddick, who took over the Bank of England's Prudential Regulation Authority in July, said in her first interview since taking the job, according to a Bloomberg report published on Nov. 10.1
Braddick said the Bank of England's extensive interrogation of banks' AI exposure has not shown that lenders would be an "amplifier" of any AI shock, according to the Bloomberg report.1 She said she can see firms reviewing their risk appetite and thinking "Yes this client, not that client," and the report links the alarm to a sell-off in AI-related stocks after the US midterm elections.1
The Bank of England is not currently planning to use capital rules to encourage lower AI exposures, Braddick said.1
The PRA and the Financial Conduct Authority will publish guidance later this month on risks from frontier AI and quantum computing, which Braddick said will be "quite concrete" and include governance expectations.1
Braddick is also looking at how to operationalize the "minimum viable bank" framework proposed by Governor Andrew Bailey earlier this year; no deadlines have been set for introducing such rules.1
The report did not say which banks are cutting exposure, by how much, or how Braddick measured the trend.1
The regulator's system-level finding does not remove the need for each bank to test its own AI client and counterparty exposure, and executives should expect governance expectations on frontier AI to arrive before any capital treatment.
The PRA and FCA are due to publish their frontier AI and quantum computing guidance later in November; the report gave no exact date.1
Our take. The Bank of England's supervisor found no sign UK lenders would amplify an AI shock, and they are trimming anyway, one client at a time. Your bank should know its own AI-borrower list before an examiner asks for it.
Action. Credit risk: Pull your top exposures to AI-sector borrowers and check each one against current risk-appetite limits.
From our records
- UK (BoE / PRA / FCA)regulator · binding Supervisory guidance · latest 2026 BoE/FCA AI survey (Oct 2026), FCA: AI in financial services — good practice and areas for improvement (Oct 2026)
Sources
- ReportTop UK Regulator Says Banks Are Trimming AI Risk as Alarm Grows Insurancejournal