U.K. challenger bank CYBG PLC has received approval to use its own models to calculate credit risk rather than a generic model, the Financial Times reported Oct. 11.

The bank said the new model will lower its capital requirements, and that the change will be effective in the first quarter of its next financial year.

If the model had been applied to its risk-weighted assets at June 30, the bank said it would have reduced total risk-weighted assets by around £5.3 billion. Its common equity tier 1 ratio would have increased 3.9 percentage points.

The approval to cut capital requirements will help CYBG compete with larger banks, the FT reported.