The Prudential Regulation Authority has lifted the amount of cash international banks can hold as deposits covered by the UK’s compensation scheme by almost a third.

The Bank of England body has increased the existing £100m and £500m threshold deposits, covered by the Financial Services Compensation Scheme, by 30%.

The body says the lower threshold was introduced in 2014, while the higher threshold was introduced in 2018.

It adds since then inflation has risen by roughly 30% in both cases, and so has lifted the thresholds to £130m and £650m, respectively.

The body says: “The PRA considers that the possible increase in FSCS-covered deposits in branches does not pose undue risks to its primary objective of safety and soundness.”

It adds: “The PRA considers that doing so would advance the PRA’s secondary objective around facilitating competitiveness and growth in the UK economy, by giving branches more room for deposit growth, and making the UK a more attractive place to establish and expand banking operations.”

The body has also introduced “a new indicative threshold” of £300m of total retail and small business instant access deposits.

PRA chief executive Sam Woods says: “These changes will maintain the UK’s very open approach to international banking, while filling a gap we identified in our regime and increasing some thresholds to support competitiveness and growth”.