Britain's government to update banks' ring-fencing regime

Britain's government has pledged to update the law underpinning the bank ring-fencing regime via a new Enhancing Financial Services Bill, aiming to boost competition and unlock more finance for UK businesses. The reforms are intended to ease operational constraints—potentially allowing essential back-office functions to be shared between ring-fenced retail units and trading banks—which could lower costs and improve SME lending by major UK banks. The change would affect firms meeting the threshold of more than £35 billion in retail deposits (about $46.1bn), including Lloyds, NatWest, HSBC, Barclays and Santander UK. The Treasury and Bank of England have not yet provided details, so market impact will depend on final legislative drafting and regulatory guidance.