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Deloitte comments on “electrification” of the banking ring-fence

4 February 2013

As the Government introduces the Banking Reform Bill to Parliament, Clifford Smout, co-head of the Deloitte Centre for Regulatory Strategy, said:

“The Government has today accepted a key recommendation of the Parliamentary Commission on Banking Standards to “electrify” the retail ring-fence. The new rules provide the regulator with the power to impose full separation of banking activities in individual banks if they attempt to undermine the ring-fence. Any banking group found to be breaching the ring-fencing rules would be forbidden from having a retail banking arm, effectively ending its ability to operate as a universal bank.

“These proposals reflect the view that supervisors need to be able to act when regulations are breached, and that the Government believes that this is a proportionate remedy in such a case.

“How the regulator will monitor compliance and respond to any attempt to breach the ring-fence will be important, as will the role of Government, who have the final say on whether to force a break-up in any individual case. Today’s publication leaves these crucial details for further legislation. Investors will understandably seek further clarity on the circumstances in which a bank may be forced to separate completely. As always, the devil is in the detail.”

Ends

Note 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.

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