Changes to the ring-fencing regime will take effect in February and will implement changes to improve how the regime works. The changes both resolve unintended consequences of the current law, provide greater flexibility to banks within scope and exempt some further banks from scope by increasing the threshold for core deposits at which banks become subject to the regime to £35bn. Retail-focussed banks that do minimal investment banking activity are also exempted. Further changes:
- reduce regulatory reporting;
- relax restrictions on geographical operation;
- address barriers to M&A activities of ring fenced banks; and
- relax certain restrictions on products and services that ring-fenced banks can offer where this would improve outcomes for banks and customers without increasing financial stability risk. These banks can now invest in UK SMEs and enter into a greater range of trade finance arrangements.