Ring-Fencing Was a Good Idea That UK Banking No Longer Needs
I’m no longer convinced the regulatory setup achieves much at all — for ordinary depositors or lenders.
Ian Stuart, chief executive officer of HSBC UK Bank Plc.
Photographer: Chris Ratcliffe/Bloomberg
UK banks want the government to abolish a key piece of post-financial crisis regulation that forces them to keep ordinary depositors’ money legally separate from their trading and investment-banking business. This uniquely British setup, known as ring-fencing, limits the kind of lending banks can do and raises their costs.
Well, most lenders don’t like it. Barclays Plc alone is happy with the rules, which may be because it is uniquely placed to benefit from any protections they afford. I was always a big supporter of the idea behind this separation, but I’m no longer convinced the setup achieves much at all — for depositors or for Barclays.