Reforms to bank ring-fencing

The statutory independent review of ring-fencing and proprietary trading led by Sir Keith Skeoch, which reported in March 2022, made recommendations to improve the operation of the ring-fencing regime.

The government will implement a package of reforms as soon as parliamentary time allows. The reforms will improve competition and competitiveness in the UK banking sector and support economic growth, while maintaining financial stability.

The reforms will include:

the introduction of a secondary threshold to exempt retail-focussed banking groups from the regime – where investment banking activity accounts for less than 10% of Tier 1 capital;new flexibilities to allow ring-fenced banks to operate globally, subject to PRA rules;measures to encourage more investment by ring-fenced banks in UK SMEs;measures to reduce the compliance burdens associated with the regime; andan increase in the primary deposit threshold for ring-fenced banks, from £25bn to £35bn.