Barclays seeks ringfencing waiver

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Barclays is seeking a waiver on rules which require banks to ringfence their retail operations from their riskier investment banking arms.

Sky News reports Barclays is in talks with the PRA to request a transitional arrangement that will protect the credit rating of its investment bank.

The rules apply to Britain’s largest banks and are due to come into force in 2019.

Under the ringfence structure, Barclays’ underperforming investment bank may struggle to achieve a high enough credit rating.

Barclays is therefore seeking to make its retail bank a wholly owned subsidiary of the rest of the group, rather than a standalone entity.

This transitional arrangement would last for several years, until sufficient capital was held within the investment bank to enable it to sustain a satisfactory credit rating on its own.

A Barclays spokesman says: “Barclays has not yet finalised its structural reform plan.

“Respecting the regulatory process, we have not, and will not, publicly discuss our plan for structural reform until it is formally approved.

“However, we can be clear that any plan we submit for approval will be wholly consistent with both the legal requirements and objectives of ring fencing.”

The PRA has signalled that it expects retail and investment banking operations to exist as ‘siblings’ rather than subsidiaries, although it will consider applications for waivers from elements of the ringfencing rules.

Banks must submit their ‘near-final’ plans to the PRA by the end of January.