The following Restructuring & Insolvency guidance note provides comprehensive and up to date legal information covering:
Ring-fencing of day-to-day banking services (eg current accounts, savings and payments) and separation of retail business from investment banking was one of the reforms brought in by the government to strengthen the financial system following the financial crisis of 2007/2008. The Prudential Regulation Authority’s (PRA) stated aim was to isolate retail banking services from the risks of global wholesale and investment banking, to ensure the continuity of deposit-taking services, to ensure greater resilience against financial crises and to remove risks from banks to the public finances.
Section 6 and Schedule 1 to the Financial Services (Banking Reform) Act 2013 (FS(BR)A 2013) required certain UK financial institutions with significant retail and small and medium-sized enterprise (SME) banking operations, to ring-fence certain activities for retail and SME depositors with effect from 1 January 2019 into a legal entity that is not permitted to carry on certain specified wholesale and investment banking activities. Banks whose core deposits do not exceed £25 billion (averaged over three years) are exempt from the ring-fencing requirements (this threshold is calculated taking into account all UK banks within a particular banking group). For further details, see the FCA’s guidance at FCA ring-fencing.
Small banks and non-bank institutions, such as insurance companies and mutuals (ie building societies, credit unions and industrial and provident
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