Skeoch Review
Ring-fencing and Proprietary Trading Independent Review: Final Report
Statutory independent review of the bank ring-fencing regime introduced by the Banking Reform Act 2013 and of proprietary trading activities, examining whether the regime remained fit for purpose following its implementation in January 2019 and making 9 recommendations.
9recommendations
9Not Yet Responded
Recommendations
Recommendation 1
Change the scope of the ring-fencing regime to focus on large, complex banks: a) Banks with deposits below £25 billion should continue to be exempt from the ring-fencing regime; b) Banks with deposits above £25 billion that do not undertake excluded activities above a certain level should be exempt from the ring-fencing regime; and c) Only excluded activities above that level should be required to be placed in an NRFB.
Recommendation 2
Align the ring-fencing regime with the resolution regime: a) HM Treasury should review the practicalities of how to align the ring-fencing and resolution regimes, with a view to introducing a new power for the authorities to remove banks from the ring-fencing regime that are judged to be resolvable.
Recommendation 3
Adjust the restrictions on servicing relevant financial institutions: a) An exemption should be introduced to allow RFBs to provide banking services to smaller RFIs; b) The definition of RFIs should be moved from legislation to the PRA Rulebook; and c) A grace period should be introduced for NRFBs to move customers that are no longer classified as an RFI to an RFB.
Recommendation 4
Improve the operation of the ring-fencing regime through technical amendments: a) Transitional periods for complying with ring-fencing rules should be introduced for mergers and acquisitions of banks; b) NRFBs should be enabled to service central banks outside of the UK; c) The status of trustees and insolvency practitioners should be clarified; and d) The notice of declaration onboarding requirement for NRFB customers should be removed.
Recommendation 5
Remove the blanket geographical restrictions from legislation that prevent RFBs from establishing operations or servicing customers outside of the EEA.
Recommendation 6
Review the excluded activities under the ring-fencing regime.
Recommendation 7
The Bank of England should ensure that sufficient plans are in place as part of its contingency planning to provide liquidity to NRFBs in a stress scenario.
Recommendation 8
Monitor risks from proprietary trading activities undertaken by banks in the UK.
Recommendation 9
Monitor and mitigate potential risks emanating from proprietary trading activities undertaken in the non-bank sector.