Barclays Bank plans to complete the separation of its retail and business banking operation from the rest of the organisation eight months before the deadline set by the UK financial services regulators.
Following the global financial crisis of 2008, which was caused by failures in the investment banking operations at the big banks, regulators instructed UK banks to introduce a clear separation between retail and investment operations. Banks must comply with the ring-fencing rule, which was introduced in 2011, by January 2019.
The legislation is designed to prevent the action of risk-taking investment banks affecting consumer savings and current accounts. It followed Independent Banking Commission (IBC) recommendations, which were drawn up after the financial crisis, and is the most overt of a plethora of regulations resulting from the sector’s troubles.
“We plan to transfer retail and business banking customers to our ring-fenced bank in April 2018,” Barclays told customers.
The bank has recently been carrying out work on systems and has planned downtime of its digital banking services to facilitate this. Services were unavailable on Saturday 19 August and Sunday 20 August, and will be unavailable again later this month, on 16 and 17 September.
Read more about the ring-fencing of banks
- The deadline for banks to have submitted plans to separate investment banking and retail operations was reached in January 2015.
- A parliamentary report on plans to separate retail and investment banking calls for legislation to prevent breaches of the ring-fence.
- With 10 years passing since Northern Rock had to be bailed out by the government, we look at how banking IT has changed since the financial crisis.
When complete, the ring-fenced bank will provide day-to-day products and services to individuals and small business in the UK. These will include deposit taking, mortgage lending, payment cards, digital payment solutions, personal loans, business banking, wealth management and investments.
Meanwhile, the rest of the bank, Barclays Bank PLC, will be a wholesale bank in the UK and US. It will offer corporate and investment banking, international cards business, payments through corporate banking and Barclaycard, as well as a private bank and overseas services business.
There will be a hearing in November when Barclays will seek approval from the Prudential Regulation Authority and the High Court of England and Wales to complete the restructure.
“[This will] initiate the process to consider and approve the scheme. Subject to approval, we expect to implement the restructure in April 2018, well ahead of the 1 January 2019 legislative deadline,” said Barclays.
There will be another hearing in February 2018 to consider and approve the scheme.