Shares in Britain’s big banks ticked higher as the Bank of England unveiled the details how they will split their retail and investment businesses in 2019.
The UK’s six biggest lenders will have to set aside between £2.2-3.3bn to insulate their retail businesses from any problems that might arise in their investment bank.
The exact amount has yet to be determined, but the Bank of England said the retail arms would have to hold more capital to cover the systemic risks in investment banking. The size of this required leverage ratio will be decided next year.
But in what is being seen as an easing of the original proposals, the BoE confirmed they will be able to transfer dividends from their retail arms into the investment banks along as capital rules are met.
Banks that have deposits of more than £25bn have to comply, which means Barclays, HSBC, Lloyds Banking, Royal Bank of Scotland, Co-operative Bank and Santander.
There was also confirmation of a change to the burden of proof in the event of a breach of the new rules. The stipulation that bankers would be presumed guilty and have to justify their actions has been scrapped.
A ring-fenced retail bank will be able to share its back office functions with its investment arm but it must be managed independently.
Andrew Bailey, chief executive of the BoE’s Prudential Regulation Authority, said: “Making our firms more resilient has been at the forefront of our post-crisis reform agenda.
“We have provided clarity for affected banks on how we will implement ringfencing and this will enable firms to take substantial steps forward in their preparations for structural reform.”
Lloyds (LON:;LLOY) shares rose 0.5p to 74.4p, Barclays (LON:BARC) 2p to 248.2p and RBS (LON:RBS) 4p to 325.2p.