Of Special Interest
2nd September 2011
UK Retail ring-fencing not before 2015
The government appears to have been extensively briefing that ring fencing of retail banking business capital from any calls from capital market or investment banking activities will be introduced but not until at least 2015.
The proposal was made in the preliminary report of the Independent Commission for Banking which is charged with designing the future structure for banking in the UK but with no suggested implementation date. The final report is not due out for another 10 days. It is understood that the Liberal Democratic Party, the smaller of the two parties in government wanted an early introduction of the proposal whilst the larger Conservative party was willing to leave the matter till towards the end of the decade. Therefore one reason for the date might be a half-way compromise. A better reason for setting 2015 is that by that time basic capital levels required for Basel III are in force. That having been said the larger UK banks are already close to, or have achieved the Basel III levels. Banks will also have to raise liquidity capital which could be to cover as long as three months.
[See Newslink: UK considering 3X greater liquidity levels for banks ]