STORY
The Government is expected to set out more detailed proposals to relax bank ring-fencing rules, which were introduced after the 2008 financial crisis to protect high street banking from problems in investment banking. The changes were included in the legislative programme for the new parliamentary session.
According to Reuters, citing Sky News, Chancellor Rachel Reeves has approved proposals that would allow Britain’s largest banks to lend at lower funding costs to organisations aligned with the Government’s economic policy objectives. The plans would also allow banks to share more services between ring-fenced and non-ring-fenced parts of their businesses.
Supporters of reform argue that the changes could reduce costs and improve lending to parts of the economy that ministers want to support. Critics are likely to scrutinise whether the new approach maintains sufficient safeguards against financial instability, given that ring-fencing was designed to prevent a repeat of the banking failures seen during the financial crisis.