PRA to consult on ring-fencing reform to reduce costs for banks
The Bank of England announced on May 17 that the Prudential Regulation Authority plans to consult on reforming rules around shared operational services for ring-fenced banks.
At a glance
- The PRA announced plans to consult on reforming shared operational services rules for ring-fenced banks
- The stated aim of the ring-fence change is to reduce costs
VERDICT — CONFIRMED
The Prudential Regulation Authority plans to consult on reforming rules around shared operational services for ring-fenced banks, the Bank of England announced on May 17.
The PRA framed the change as a way to reduce costs, per the announcement. The rules at issue govern how ring-fenced retail banking entities may share operational services within their wider banking groups — one of the structural separations imposed on large UK banks after the financial crisis.
The announcement is of a consultation to come, not a rule change: no consultation paper text, timeline, or estimate of the cost savings was included in the material reviewed.
The confirmed fact is the stated intention to consult and its cost-reduction rationale, per the Bank of England. The scope of the eventual reform will be defined when the PRA publishes the consultation itself, followed by an industry response period before any final rules.
Key facts on file
- The PRA announced plans to consult on reforming shared operational services rules for ring-fenced banks
- The stated aim of the ring-fence change is to reduce costs
