Ring-fencing: the unintended consequences
Reports & Whitepapers

Ring-fencing: the unintended consequences

Samantha Bett FX February 2018

Following the financial crisis in 2008 and the massive costs of the government bail-outs of RBS and Lloyds Banking Group, an Independent Commission chaired by Sir John Vickers, recommended in 2011 that UK banking activities be ‘ring-fenced’.  All retail activities such as consumer banking, mortgages, SME payments and operations should be managed inside a retail ring-fenced bank.  All riskier banking activities including structured derivatives and capital markets activities should be managed in the investment banking arm of the bank, completely separated from the retail operations.

However, at JCRA, we are beginning to see unintended consequences of the ring-fencing initiative impact our client base. Without a standard approach across banks in terms of their categorisation of derivatives, the impact on borrowers and exporters/importers with hedging products is uncertain, depending on the bank in question. While the primary reason for the legislation was, at a macro level, to avoid and/or minimise the impact of future banking failures, the reality is that, at a micro level, the changes are beginning to affect some of our clients negatively, increasing their costs and exposure to risk.

Download this report to find out the impact  of ring-fencing on your existing interest rate or inflation hedging positions and how JCRA can help you navigate this process. 


Recent Insights

Reports & Whitepapers
JCRA 2018 Annual Review
Jackie Bowie JCRA February 2019
Reports & Whitepapers
Social Housing Deal Digest Q3 2018
Duncan Salter Social Housing November 2018
Reports & Whitepapers
Real Estate Deal Digest Q3 2018
Shane Canavan Real Estate November 2018

Contact us

If you need hedging or debt advice or would like to speak about how we could help your business, please get in touch.