Britain to Reform Bank Ring-Fencing Regime for Improved Business Lending
Overview of Proposed Banking Reforms in the UK
Government Commitment to Updating Ring-Fencing Laws
LONDON, May 13 (Reuters) - Britain's government has committed to updating the law underpinning the ring-fencing regime, which requires banks to separate their retail business from riskier activities such as investment banking.
Details of the Enhancing Financial Services Bill
In a document published on Wednesday setting out parliamentary priorities, the government said reforms to the regime, to be included in a new Enhancing Financial Services Bill, would unlock more finance for UK businesses.
Impact on SME Lending
“Improved competition in small and medium-sized enterprises' (SME) lending will help small businesses access finance," the government said.
Government’s Pledge for Meaningful Reform
Britain's finance minister Rachel Reeves last year promised "meaningful" reforms to ring-fencing, part of government efforts to slash red tape to boost economic growth.
Scope of the Ring-Fencing Rules
The rules kick in for banks with more than 35 billion pounds ($46.1 billion) in retail deposits and cover Lloyds , NatWest , HSBC, Barclays and Santander UK.
Potential Changes and Industry Response
Back-Office Function Sharing
Britain’s finance ministry and the Bank of England did not immediately respond to a request for more detail on the proposal, although a source at a large UK bank said they understood it to mean legislation that would permit essential back-office functions to be shared between the ring-fenced and trading bank - which is prohibited under existing rules.
Awaiting Official Details
(Reporting by Phoebe Seers and Muvija M; Editing by Toby Chopra and Hugh Lawson)
