As of 1 January 2019 the largest UK banks are required by UK law to separate core retail banking services from their investment and international banking activities. This is known as ring-fencing. This page outlines the ring-fencing regime and our approach to it.
25 January 2024: We published a Review of ring-fencing rules.
The global financial crisis revealed the need for fundamental changes to how banks are run. As part of its response to the crisis, the Government developed legislation to require UK banks to separate the provision of core retail services from other activities within their groups. These requirements are known as structural reform or ring-fencing. Ring-fencing is a key part of the Government’s package of banking reforms designed to increase the stability of the UK financial system and prevent the costs of failing banks falling on taxpayers.
The aim of ring-fencing is to protect UK retail banking from shocks originating elsewhere in the group and in global financial markets. It covers banks with more than £25 billion of core (retail and SME) deposits. Under the new regime, core banking services – taking deposits, making payments and providing overdrafts for UK retail customers and small businesses – become financially, operationally and organisationally separate from investment banking and international banking activities. Banks that have been separated (or 'ring-fenced') from the rest of their groups in this way are known as ring-fenced bodies.
Ring-fencing regime came into effect on 1 January 2019. All banks in scope of ring-fencing completed the necessary implementation activities, and £1.2 trillion of core deposits were placed in ring-fenced banks. To ensure the structure of their business is compliant with structural reform requirements, over 2017-2018, the banking groups in scope adopted new legal structures and ways of operating through large and complex restructuring programmes. Many banks restructured their business using the 'ring-fencing transfer scheme' (RFTS) process.
The final policies that firms were required to implement can be found under ‘Latest structural reform news and publications’. This includes final policies on governance, legal entity structures, operational continuity arrangements, prudential requirements, intra-group arrangements, financial market infrastructures and reporting and residual matters.
In future, more banks may be required to ring-fence if they pass the threshold of £25 billion core deposits (measured on a three-year rolling average basis) either through organic growth or via acquiring another bank. Any firms that are expected to meet this threshold should discuss their plans to become compliant with ring-fencing with their supervisors as early as possible.
The list of ring-fenced bodies are available on our 'Which firms does the PRA regulate?' page.
Ring-fencing does not change the fundamental principles of our supervisory approach. However, it could require more intensive supervisory engagement for groups in scope of the new regime because of the new legislative and regulatory requirements and the new entities we need to supervise.
Our focus in the early post-implementation period has been on ensuring the ring-fencing arrangements that have been established by firms are effective in practice, and remain so. In addition to checking the compliance with the new legislative and regulatory requirements, we will continue to test the effectiveness of the firms' ring-fencing control environment, the robustness of the financial position of ring-fenced subgroups, and their ability to make decisions independently.
More information on the way we carry out our role in respect of deposit-takers and designated investment firms, including ring-fenced banks, can be found in the PRA's approach to banking supervision.
Banking groups with a ring-fenced entity are required to submit additional regulatory returns. These include the addition of RFB sub-group reporting for existing in-scope returns, and the addition of new RFB00x returns. Information on the ring-fencing regulatory reporting requirements can be found on the Regulatory reporting – banking sector webpage.
For an overview of ring-fencing and its impact on banks and their customers, see 'Ring-fencing: what is it and how will it affect banks and their customers?' Quarterly Bulletin 2016 Q4 and 'Why are retail banks being 'ring-fenced' and how will this affect me?'
For more information on RFTS, see the PRA’s approach to RFTS.
We are required by the Financial Services (Banking Reform) Act 2013 to report annually on certain aspects of ring-fencing compliance. The Prudential Regulation Authority Annual Report 2022/23 includes a section on ring-fencing. You can also read about ring-fencing in the Prudential Regulation Authority Business Plan 2023/24.
Also see the Financial Conduct Authority (FCA) and HM Treasury information on ring-fencing.
Please see The National Archive for historic structural reforminformation, including detailed policy development news from 2014-2017.
January
25 January 2024: We published a Review of ring-fencing rules.
March 2023
2 March 2023: The Government published Aligning the ring-fencing and resolution regimes: Call for Evidence seeking views on the practicalities of aligning ring-fencing and resolution regimes for banks and long-term options for reform.
September 2023
28 September 2023: We published CP20/23 – Ring fenced bodies: managing risks from third-country subsidiaries and branches, which proposed a new rule requiring a ring-fenced body (RFB) or ring-fenced affiliate to ensure that risks arising from its overseas branch or subsidiary are not material to the safety and soundness of the RFB, including its resolvability, and its ability to continue to provide core services in the UK. In addition, the CP proposes amendments to supervisory statement (SS) 8/16 Ring-fenced bodies (RFBs).
28 September 2023: The Government published a smarter ring-fencing regime: Consultation on near-term reforms, which invited views on draft secondary legislation to implement a package of reforms to the ring-fencing rules. The proposed reforms, broadly take forward the recommendations of the independent review of ring-fencing and proprietary trading.
28 September 2023: The Government published aligning the ring-fencing and resolution regimes: Call for evidence response which summarised the 14 responses received and set out next steps.
December 2022
9 December 2022: The Government published a policy paper setting out its response to the recommendations of the Independent Panel on Ring-fencing and Proprietary Trading.
March 2022
15 March 2022: The Independent Panel on Ring-fencing and Proprietary Trading published its final report, which was laid before Parliament by HM Treasury.
June 2020
18 June 2020: We published a report on certain aspects of ring-fencing, set out in the ‘Complying with FSMA’ section of the PRA Annual Report 2020. We also published a list of ring-fenced bodies as at 1 January 2020 available on our ‘Which firms does the PRA regulate?’ page.
June 2019
6 June 2019: From 1 January 2019, the PRA’s general safety and soundness objective has been amended to reflect the aims of structural reform (also referred to as ring-fencing). The PRA’s first report on certain aspects of ring-fencing is set out in the ‘Complying with FSMA’ section of the PRA Annual Report 2019. We also published a list of ring-fenced bodies as at 1 January 2019 available on Which firms does the PRA regulate?
May 2019
1 May 2019: We published 'Systemic Risk Buffer rates for ring-fenced banks and large building societies' (applicable from 1 August 2019).
April 2019
15 April 2019: We published the PRA's Annual Business Plan 2019, which included an update on structural reform.
January 2019
1 January 2019: Today, structural reform requirements came into effect for banks with more than £25 billion of retail deposits. For further details on structural reform and the policy issued to date please see below.
December 2018
13 December 2018: We published Policy Statement 32/18 ‘The system risk buffer: Updates to the Statement of Policy’ and an updated Statement of Policy ‘The PRA's approach to the implementation of the systemic risk buffer’.
5 December 2018: We published Policy Statement 30/18 ‘Regulatory reporting: Responses to CP16/18’, updated SS34/15 ‘Guidelines for completing regulatory reports’ and SS32/15 ‘Pillar 2 reporting, including instructions for completing data items FSA071 to FSA082, and PRA 111’. This includes links to templates and instructions which have been updated to reflect their application to ring-fenced bodies, also available on the Regulatory reporting – banking sector page.
November 2018
26 November 2018: We published ‘From construction to maintenance: patrolling the ring-fence’ a speech by James Proudman, Executive Director of UK Deposit Takers Supervision, about ring-fencing and its implications for the banks and the PRA.
22 November 2018: We published Consultation Paper 29/18 ‘The systemic risk buffer: Updates to the Statement of Policy’. Given the minor nature of the proposed updates, this consultation closes on Thursday 6 December 2018.
14 November 2018: We published Policy Statement 28/18 ‘UK leverage ratio: Applying the framework to systemic ring-fenced bodies and reflecting the systemic risk buffer’. This includes:
We have also published ‘Additional Leverage Ratio Buffer Model Requirements’ on the SS45/15 webpage.
The changes to the rules and expectations, and all other materials published today, will take effect from Tuesday 1 January 2019.
October 2018
31 October 2018: We published the ‘Ring-fencing: Summary of regulatory reporting requirements’ pack which summarises the new regulatory reporting, and reporting system requirements in relation to ring-fencing. The pack is aimed at UK banking groups in scope of structural reform requirements that will be required to submit ring-fencing regulatory returns from 1 January 2019.
Ring-fencing: Summary of regulatory reporting requirements
September 2018
12 September 2018: We published Consultation Paper (CP) 19/18 ‘Regulatory Reporting: EBA Taxonomy 2.9’. This CP sets out proposals to update certain PRA reporting requirements to reflect relevant proposals made by the European Banking Authority (EBA) in its open consultations on changes to the Implementing Technical Standards (ITS) on Supervisory Reporting.
This consultation closes on Wednesday 12 December 2018. The PRA invites feedback on the proposals set out in this consultation. Please address any comments or enquiries to CP19_18@bankofengland.co.uk.
July 2018
3 July 2018: We published Consultation Paper (CP) 14/18 'UK leverage ratio: Applying the framework to systemic ring-fenced bodies and reflecting the systemic risk buffer'. The CP proposes to apply the systemic risk buffer (SRB) framework in the UK leverage ratio framework.
This consultation closes on Tuesday 25 September 2018.The PRA invites feedback on the proposals set out in this consultation. Please address any comments or enquiries to CP14_18@bankofengland.co.uk.
February 2018
23 February 2018: We published updated versions of RFB001 to RFB008 instructions. The ‘Units’ section in each set of reporting instructions has been updated to clarify the precision required for reporting. The updated instructions can be found on Regulatory reporting – banking sector.
22 February 2018: We published updated details of banks’ ring-fencing transfer scheme court dates and the case reference numbers for each scheme:
Ring-fencing transfer schemes - dates for banks' court hearings
For more information on how to serve written statements (objections) to the PRA on RFTS, see Written statements to the PRA on RFTS.
12 February 2018: We published updated details of banks’ ring-fencing transfer scheme court dates. This was updated on Thursday 22 February, and is available above.
7 February 2018: We issued a modification by consent of Fitness and Propriety 2.7 so that firms subject to ring-fencing may apply to be exempt from having to obtain regulatory references from firms outside their group in respect of certain intragroup employee transfers linked to ring-fencing transfers.