Ring-fencing Banks: who is doing it, why and will it work?


In the aftermath of the financial crisis, the ring-fencing of certain bank activities has been proposed in a number of jurisdictions.  Its aim is to protect consumers by reducing the level of risk that they are exposed to through non-traditional banking activities.  Specifically, ring-fencing is the separation of retail banking (that is banking that involves consumers and small businesses) from wholesale, or investment banking, within an otherwise ‘universal’ banking group.  The use of ring-fencing in the United Kingdom (UK) was proposed by the Vickers Commission[1] and it now seems likely that it will be introduced by 2019.  The EU is also exploring the possibility of ring-fencing following the Liikanen Report of 2012

[1] The Report of the Independent Commission on Banking in 2011, hereafter the ‘Vickers Report’.

By Andrew Campbell. Professor. University of Leeds and Paula Moffat. Principal Lecturer.
Nottingham Law School.