UK banks position for role in Burnham’s regional investment plans; Brussels plans overhaul of cross-border banking rules 

Today’s need-to-know storiesUK banks position for role in Burnham’s regional investment plans

The UK’s largest banks are positioning themselves to finance regional infrastructure projects, which are expected to emerge from the devolution plans of newly appointed prime minister Andy Burnham.

According to reporting by the FT, Lloyds Banking Group and NatWest have held discussions with Burnham’s advisers, focusing on their regional networks, business customers and experience financing transport, housing and other local projects.

Burnham has pledged to transfer more powers to regional governments, establish a “Number 10 North” hub and narrow the economic gap between London and other UK cities.

Three senior UK banking figures told the newspaper that lenders broadly support greater devolution because it could accelerate infrastructure development and create more opportunities for banks to provide financing.

“I have advocated for some time on the merits of devolution and believe decisions affecting local economies are often better made closer to the communities and businesses they serve,” NatWest chief executive Paul Thwaite told the FT in separate comments last week.

Brussels plans overhaul of cross-border banking rules

The European Commission plans to curb political interference in cross-border bank mergers in an effort to lower the barriers that prevent EU lenders from competing with larger US rivals.

A commission report released on Friday said national restrictions had limited banking consolidation largely to domestic markets, leaving European banks without the scale enjoyed by US competitors. 

“This leads to an outcome where many banking groups in the EU are large relative to the size of their home economy, but not relative to the size of the EU or the banking union economy or international competitors,” the report said.

The commission is expected to propose a range of measures in early 2027, including action against member states which intervene in mergers without sufficient justification. 

It also plans to ease capital and liquidity requirements for cross-border banking groups, which it estimates could free up €230bn in liquid assets, and replace a stalled proposal for a European deposit insurance scheme with a revised framework.

Morgan Stanley emerges as AI financing leader

Morgan Stanley has become Wall Street’s leading adviser on the AI infrastructure boom, arranging tens of billions of dollars in financing for data centres and advanced chips, according to reporting by the FT.

Since last year, the bank has arranged several major AI-related deals, including a $3.2bn bond for Google-backed data centre developer TeraWulf and a $27bn financing package for Meta’s Hyperion project. More recently, it advised Broadcom on a $35bn AI chip financing deal.

Helped by this surge in AI-related dealmaking, Morgan Stanley’s debt and equity capital markets fees rose to $2.3bn in the first half of 2026, from $1.4bn a year earlier, according to LSEG data.

The increase pushed the bank ahead of Goldman Sachs and lifted it from fourth to second place globally for capital markets fees, behind JPMorgan.

South Korea to make won freely tradeable

South Korea is planning to make the won freely tradeable for overseas investors, as the country looks to further liberalise the currency.

In a joint statement, the central bank and other regulators outlined that foreign investors will be able to conduct unlimited won transactions through international firms that have preregistered with the government, starting from January 2027. This will remove the need for them to open won accounts.

Transfers in won between foreigners using the channel will be exempt from advance reporting of most capital transactions, with the exception of domestic real estate.

In most cases, banks will be required to verify only basic account information from September 2026. Settlements will proceed through a new 24-hour Bank of Korea network, which will be fully implemented from September 2027.

Earlier this month, South Korea commenced 24-hour won trading in a bid to increase foreign investor access to the market and achieve an upgrade to MSCI’s developed market index.

Singapore weighs up fund manager tax cut

Singapore is considering cutting taxes for hedge fund managers as it seeks to attract talent away from Hong Kong.

The Monetary Authority of Singapore and investment industry professionals have been in discussion about what can be done to mitigate against Hong Kong’s plans to bring about tax changes that could entice away portfolio managers, according to the FT.

“A number of Singapore firms are saying that they need to set up Hong Kong offices or create arrangements where certain members can work in Hong Kong,” a person involved in the discussions told the FT. “MAS is hearing that and the discussions have intensified.”

Hong Kong is planning to introduce changes to its rules on carried interest, which could enable many asset managers to avoid paying any tax on their performance fees. Profits from a wide range of investments would fall under a tax-free umbrella, which could benefit hedge funds, private equity, venture capital, private credit and family offices.