Deloitte comments on the PRA’s ring-fencing implementation consultation

David Strachan, Head of EMEA Centre for Regulatory Strategy, Deloitte:

“In spite of recent talk of ring-fencing being ‘watered down’, the PRA’s proposals are a reminder that ring-fencing remains a major challenge for the largest UK banks.

“Although the PRA has said it intends to provide flexibility by adopting an ‘outcomes-based’ approach, in reality it is constrained by the need to implement the primary legal requirements of ring-fencing, which will inevitably increase capital requirements and operating costs for UK banks.”

Clifford Smout, partner, EMEA Centre for Regulatory Strategy, Deloitte:

“Ring-fenced banks will have to become autonomous from the rest of their groups in a whole host of ways – from needing their own risk management resources, to re-engineering their relationships with financial market infrastructures (including the Bank of England itself), and disentangling the complex financial connections between different parts of the group. The requisite investments in systems, data capabilities and compliance architecture will be considerable.

“There is a lot of detail to digest here, and industry faces a challenge to incorporate all this new information into revised – and ‘near final’ – implementation plans for the regulators in just three months.”

End

Notes to editors

About Deloitte
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

The information contained in this press release is correct at the time of going to press.

Member of Deloitte Touche Tohmatsu Limited.