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The UK is set to revise its bank ring-fencing rules to enhance the competitiveness of the banking sector, reported Reuters.
City minister Tulip Siddiq announced the forthcoming reforms, which are intended to support economic growth while preserving financial stability.
The current ring-fencing regulations, which separate retail banking services from investment banking activities, were introduced to protect consumers following the 2007-09 financial crisis.
Siddiq stated that the government would raise the threshold for retail deposits that trigger these rules from £25bn ($32.7bn) to £35bn.
Additionally, a new secondary threshold will be introduced, exempting retail-focused banks with investment banking operations that account for less than 10% of their core capital.
The planned reforms are also expected to provide flexibility for ring-fenced banks to operate internationally and promote increased investment in small businesses.
Despite the Bank of England’s (BoE) Prudential Regulation Authority (PRA) finding that the existing rules are satisfactory and effectively support the legislative framework, the industry believes that adjustments are necessary to maintain the UK’s position as a leading financial centre.
The BoE, which oversees the regulation of lenders, has not yet commented on the proposed changes.
It conducted an independent review of the rules and in a statement, the PRA said: “The overall conclusion of this review is that most rules are performing satisfactorily.
“They remain an important support for the statutory regime, they discharge thelegislative intentions and they are operating effectively. The rules appear to be well understood by firms, and no significant gaps have been identified.”
However, the reforms are set to be implemented as soon as the parliamentary schedule permits, according to Siddiq.
In other UK banking news, earlier this month, Meta expanded its information-sharing partnership with banks through the Fraud Intelligence Reciprocal Exchange.
This programme enables financial institutions to share intelligence with Meta to combat fraud and protect users.
NatWest and Metro Bank are the first UK banks to join the pilot, with more expected to follow.
Source:
https://www.reuters.com/business/finance/britain-implement-bank-ring-fencing-reforms-soon-says-city-minister-2024-10-14/#:~:text=LONDON%2C%20Oct%2014%20(Reuters),Tulip%20Siddiq%20said%20on%20Monday
https://www.reuters.com/business/finance/bank-england-says-ring-fencing-capital-rules-retail-banks-need-no-major-overhaul-2024-01-25
“UK plans to ease ring-fencing regulations for banks to boost competitiveness ” was originally created and published by Retail Banker International, a GlobalData owned brand.