On Monday 12 September the Independent Commission on Banking published its final report on reforms to the UK banking sector which includes the following recommendations:


  • Ringfencing of retail banking operations from wholesale/investment business operations.
  • Banks’ UK retail banking operations to be carried out by separate subsidiaries, with their own obligations to meet regulatory requirements for capital, liquidity, funding and large exposures on a stand alone basis.
  • Within the ringfence would be taking deposits from (and providing overdrafts to) individuals and small and medium-sized enterprises, although the provision of straightforward banking services to large domestic non-financial companies can be permitted (but not required).
  • The relationship with other parts of a banking group should be no greater than that permitted for third parties and should be conducted at arm’s length.
  • A subsidiary should make disclosures and reports as if it were an independently listed company.
  • “One-stop” relationships for customers requiring both retail and investment banking services would still be available.

Loss absorbency

  • Large UK retails banks should have equity capital of at least 10 per cent of risk-weighted assets (which exceeds the Basel III minimum).
  • Large UK banking groups should have primary loss-absorbing capacity of at least 17 per cent–20 per cent (which allows for regulatory discretion).
  • There is a preference for deposits insured by the Financial Services Compensation Scheme which would then allow those deposits (and hence the FSCS) to rank above unsecured creditors on insolvency.


  • An improved switching service for personal and business current accounts.

Banks should be strongly encouraged to implement any operational changes as soon as possible. Implementation should however be completed at the latest by the Basel III start date of the beginning of 2019.

Further reading

The Independent Commission on Banking – Final Report Recommendations