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Lloyds
seeks 'lower' ringfence to save investment banking business: FT
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[February 17, 2014]
(Reuters) — Lloyds Banking Group Plc <LLOY.L> is in talks with
Britain's Prudential Regulation Authority over "ringfencing" rules
in an attempt to save its investment banking functions, the
Financial Times reported on Sunday.
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 The state-backed group is concerned that the cost of operations
after ringfencing takes effect may outweigh the benefits, forcing
the group to shut investment banking activities and operate as a
retail business alone, sources familiar with Lloyds' plans told the
newspaper.
Lloyds Banking Group and the Prudential Regulation Authority could
not immediately be reached for comment.
Ringfencing for banking groups in the UK is scheduled to be
implemented by 2019. It is expected to force big British banks to
legally separate their retail banking operations from investment
banking, in line with the recommendations of the Independent
Commission on Banking, which was led by Sir John Vickers.
The FT quoted people familiar with the matter saying that Lloyds is
in discussions with the regulator to allow it to operate a "lower"
ringfence so that its retail and investment banking activities would
not have to be so rigidly separated.
The report cited people close to Lloyds saying that the bank's
initial discussions with the regulator were progressing well and
that the regulator "understood" the group's situation. One of the
sources said "we hope the regulator will be pragmatic."
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"Given that we are predominantly a retail and commercial bank, we
would expect to be less affected than other major UK banks by the
implementation of a retail ringfence. We remain committed to
providing our clients with a broad range of banking services," a
Lloyds representative told the Financial Times.
The PRA is expected to consult and finalize the structure of
ringfencing with banks in 2014.
(Reporting by Aashika Jain in Bangalore;
editing by Matthew lewis)
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