Overview
- HM Treasury, which published its Ring-Fencing Review on Monday, set out reforms to be taken forward through primary legislation to make the rules more agile and proportionate.
- Ring-fencing separates everyday retail banking from riskier trading and investment activities, and the regime applies to groups with more than £35 billion in core deposits, including Barclays, HSBC, Lloyds, NatWest and Santander UK.
- A proposed New Growth Allowance would let major banks use a limited share of their balance sheets more flexibly, with the Treasury saying this could enable up to £80 billion of extra financing for UK firms.
- The package would cut duplication by allowing shared back-office services across ring-fenced and non-ring-fenced units and would permit a wider product range, including lending linked to public bodies such as the British Business Bank and the National Wealth Fund.
- Ministers say depositor protections remain in place as the Prudential Regulation Authority gains more scope to tailor detailed rules, with consultations and secondary legislation to follow once the main bill passes.