"This will help smaller banks and building societies 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."
Challengers including Aldermore, Shawbrook, Metro Bank, Secure Trust Bank, OneSavings Bank and Charter Savings Bank have been campaigning for "a more proportionate approach to the regulation of smaller banks, particularly in respect of capital".
In a letter to Tyrie, they said: "This will help smaller banks and building societies 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."
Challenger banks have long argued that they unfairly face steeper capital requirements than larger lenders, in part because they do not have enough capacity or resources to use the internal ratings-based approach to calculating credit risk.
Tyrie has previously written to the Bank of England about the effect of the Bank Corporation Tax Surcharge on new retail banks which introduced a new 8% surcharge on bank profits.
In response to the challenger banks, Tyrie said: "Brexit poses risks; it may also create opportunities. Current EU legislation could be placing smaller banks at a disadvantage. This is because it risks imposing a 'one size fits all' approach to banking regulation.
"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."
Yesterday, in his appointment hearing with the Committee, Sam Woods, Mr Bailey's successor as Deputy Governor for Prudential Regulation and Head of the PRA, admitted that, with some qualification, "there is a genuine issue here", and agreed with Mr Tyrie's request to "keep it high on his agenda in his new job".
