Rachel Reeves has called in the bosses of Britain’s top banks for a summit this week to discuss the economic impact of the war in Iran.
The Chancellor has invited executives from Barclays, HSBC, Lloyds, Natwest, Santander UK as well as the UK’s biggest building society Nationwide for a meeting this Wednesday.
The meeting – as reported by Sky News – will include Natwest boss Paul Thwaite and Lloyds’ chief Charlie Nunn. Barclays retail boss is Vim Maru is expected to attend along with Nationwide boss Debbie Crosbie. Santander will be represented by its new UK chief Mahesh Aditya.
The economic consequences of the Iran war is set to be the top issue on the docket as the Chancellor looks at how to mitigate the fallout across the country.
Earlier this month, the International Monetary Fund (IMF) handed the UK economy the biggest downgrade forecast of any country in the G7.
Growth was slashed by 0.5 percentage points following the turmoil in the Middle East, which has left energy prices elevated.
It comes as banks gear up to release their first-quarter updates, where the volatility in the Middle East is expected to play a major role as banks hike their provisions for loan losses. Barclays will be the first bank to report on 28 April, followed by Lloyds on the 29 and Natwest on the 1 May.
Banks to help Reeves navigate Iran turmoil
Last week, fresh figures from the Office for National Statistics (ONS) showed the UK economy grew 0.5 per cent ahead of the war – much higher than expectations.
But City economists quickly poured cold water over any hopes of economic strength, branding the spurt “too good to be true“.
Martin Beck, a former Treasury economist now at WPI Strategy, said the latest figures were the “calm before the storm” as growth in the first quarter of the year is set to be dragged down by more worrying figures to be published next month.
A note from RBC said Barclays would be the most “hurt” bank by economic downgrades due to its optimistic macro forecasts.
Barclays forecast for 2026 economic growth – which is used to calculate expected credit losses – comes in at 1.1 per cent, far above the more modest 0.7 per cent pencilled in by Lloyds.
The independent body average – which pulls a consensus from a range of professional institutions outside of the banks themselves, such as the IMF, HM Treasury, NIESR, Bloomberg, and the Bank of England – sits at one per cent.
The meeting arrives as tensions ramp back up in the Middle East following Iran re-closing the Strait of Hormuz over the weekend due to the US’ blockade. Trump has also returned to threats to bomb Iranian power plants with the ceasefire deadline for Wednesday fastly approaching.
Ring-fencing row returns to table
Banks are also expected to use the meeting to continue key lobbying endeavours around regulation, including potential reforms the ring-fencing regime introduced after the 2008 financial crisis.
Ring-fencing requires major banks to separate their retail banking operations from their investment banking activities. It was introduced in the wake of the financial crisis to ensure stability and was mandated in the Financial Services Act 2013.
The threshold to be ring-fenced was raised to £35bn, from £25bn previously, in October 2024 by ex-City Minister Tulip Siddiq.
But top bank bosses have continued to lobby for a more favourable regime with the bosses of HSBC, Santander, Natwest and Lloyds writing to the Chancellor calling the system “redundant”.
CS Venkatkrishnan, Barclays’ chief executive, broke from his peers to defend the system, however, arguing there were net benefits.
“There are two counterpoints: we have spent the money on the set-up and we make it work; but the more important fact is that you have to weigh against this the immense amount of depositor protection that the ring-fencing regime gives the country,” he said.
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