Following on from its April 2011 Interim Report (, the ICB published on 12 September its Final Recommendations ( on reforms to promote stability and competition in UK banking. The recommendations on financial stability call for both structural reform and enhanced loss-absorbency within UK banks. Structural change in UK banking markets is recommended in order to promote competition in the sector.

The ICB’s key recommendations include:

  • the retail ring-fencing of UK banks, such that UK retail activities will be carried out in subsidiaries separate from the rest of the banking group;
  • ensuring that domestic retail banking services should be inside the ring-fence, global wholesale/investment banking should be outside, and the provision of straightforward banking services to large domesticnon-financial companies can be in or out;
  • providing that large UK retail banks should have equity capital of at least 10% of risk-weighted assets, exceeding the Basel III minimum, and that retail and other activities of large UK banking groups should have primary loss-absorbing capacity of at least 17-20%;
  • improving competition in UK banking by the creation of a new challenger by way of the Lloyd’s divestiture; and
  • establishing a free redirection service for personal and SME current accounts to improve switching of accounts.

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