Ringfenced British Banks Will Need BOE Permission to Pay Dividends--Update
October 15 2015 - 5:57AM
Dow Jones News
By Max Colchester and Margot Patrick
LONDON--U. K. "ringfenced" banks will need permission from the
Bank of England to pay dividends to their parent companies and will
have to pay market rates for services provided by other parts of
their organizations, the central bank said Thursday.
Big U.K. banks are required under new laws to separate their
retail banks from investment-banking activities. The guidelines
represent draft guidance for banks on how to apply the rules.
The banks that the rules would apply to are: Barclays PLC, HSBC
Holdings PLC, Lloyds Banking Group PLC, Royal Bank of Scotland
Group PLC, Co-operative Bank PLC and Santander UK, the British arm
of Spain's Banco Santander SA.
The retail operations of big U.K. banks will also have to hold
extra capital to cover systemic risk in their operations, even if
their larger groups are also subject to systemic risk buffers, the
Bank of England said.
The Bank of England's Financial Policy Committee has yet to
determine exactly how much extra capital the ring-fenced bank needs
to hold. The ring-fenced bank's leverage ratio will be determined
in 2017
Banks have to ensure that a ringfenced unit can be detached from
a lender if it fails. The new rules come into force in 2019 and
apply to six U.K. banks which each hold more than GBP25 billion
($38.73 billion) in deposits.
Ring-fenced entities need their own support functions and have
their own boards. The ring-fenced bank can access other functions,
such as back office support, within the larger group through
outsourcing agreements, the paper said.
The rules could also hinder moving capital around the banks.
Lenders will have to hold capital against loans made between the
ringfenced and non-ringfenced bank.
Write to Max Colchester at max.colchester@wsj.com and Margot
Patrick at margot.patrick@wsj.com
Access Investor Kit for "Barclays Plc"
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=GB0031348658
Access Investor Kit for "Barclays Plc"
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US06738E2046
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 15, 2015 05:42 ET (09:42 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
Royal Bank of Scotland (NYSE:RBS)
Historical Stock Chart
From Mar 2024 to Apr 2024
Royal Bank of Scotland (NYSE:RBS)
Historical Stock Chart
From Apr 2023 to Apr 2024
