The Weekend FT has just run a piece on the continued debate associated with UK bank ringfencing by the regulator, which is expected to be finalised this year. Ringfencing will cause banks to shift less risky retail banking activities into separately governed and managed subsidiaries.
The article, written by Emma Dunkley and Martin Arnold and entitled Global Banks at Odds over Ringfencing Rules in the UK, explore the issues surrounding this proposal which is designed to reduce the risk of a tax payer bailout of a UK bank. It also interestingly develops the theme that banker's response to the proposals depends on their operations. Banks like Lloyds and Santander UK may have less of an issue with ringfencing than more complex banking groups like HSBC or Barclays with large retail and wholesale banking functions. Lloyds for one believes about 95% of its activities fit within the new entity, thus alleviating the need to formally ringfence. Clearly, more to come in this area of future governance.
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