Frequently asked questions (FAQs)
What is ring-fencing?
Ring-fencing of essential retail banking services is one of the reforms brought in by the UK government, aiming to strengthen the UK financial system following the financial crisis that began in 2008.
Ring-fencing legislation requires each of the larger UK high street banks, including Barclays, to separate certain retail and smaller corporate banking activity and products, like savings accounts, current accounts and payments, from more complex, wholesale and investment banking activity and from certain activities outside of the European Economic Area. The separation has to be completed by 1 January 2019.
Barclays will satisfy this requirement by setting up a new bank in the first half of 2018, which will be separate from Barclays Bank PLC. The two entities will operate alongside, but independently from, one another as part of the Barclays Group under the listed entity, Barclays PLC.
The separation will be achieved by transferring the current Barclays UK division of Barclays Bank PLC into the new ring-fenced bank, which will offer everyday business and personal banking services in the UK to retail customers and smaller corporate business banking.In addition, the Prudential Regulation Authority requires banks to demonstrate “operational continuity” of their “critical services”. Critical services are the infrastructure services that a Bank’s businesses require to operate. Operational continuity is a requirement to ensure that provision of these critical services is robust and capable of continuing through a period of financial difficulty that a bank may face. The Group Service Company will deliver critical services to the Barclays Group and its divisions (Barclays UK and Barclays International). In the US, Barclays implemented a new corporate structure in July 2016 with the launch of an Intermediate Holding Company (IHC), which is a bank holding company that sits beneath Barclays Bank PLC and consolidates Barclays’ US subsidiaries.
The IHC is an umbrella holding company for the Bank’s US subsidiaries, and is subject to Federal Reserve prudential standards to ensure safety and soundness, particularly around capital, liquidity and risk management.
What does Structural Reform mean for Barclays’ customers and clients?
Barclays strategy is to focus on its strength as a transatlantic consumer, corporate and investment bank with global reach. Barclays announced in March 2016 that it would be organised into two clearly defined divisions, Barclays UK and Barclays International. Both will be supported by a Group Service Company, which houses the majority of Barclays’ Group Functions, including Operations and Technology. This has enabled Barclays to accelerate its strategy and simplify the Group as well as helping prepare us for ring-fencing requirements, which come into effect on the 1st January 2019. This has no immediate impact on customers or clients we will contact our customers and clients in good time if they are affected.