Ring-fencing and Santander
What it means for you
After the global financial crisis which began in 2007, the UK Government arranged for an independent review of the ways in which UK banking groups are organised. This independent review recommended several important reforms designed to strengthen the financial system.
Ring-fencing is one of these reforms and was introduced in the Financial Services (Banking Reform) Act of 2013. It means the largest UK banking groups, including Santander UK, have to comply with new requirements to ring-fence their retail activities (like current accounts, savings accounts and payments).
This means that we will be separating our more complex wholesale banking activity from our retail banking activity by 1 January 2019.
We’ll continue to add information about ring-fencing to this website over the coming months. Please check these pages regularly for updates. If you have any questions please visit the Contact us section for further information.
What is ring-fencing?
Ring-fencing arrangements must be in place by 1 January 2019.
Broadly speaking, ring-fencing legislation will affect any banking group that has more than £25 billion of UK deposits from individuals or small businesses. In general, within these groups, any UK bank that holds deposits from retail individuals or small businesses will be a ring-fenced bank.
Ring-fenced banks will be subject to restrictions on their business activities, designed to protect their customers’ deposits. The restrictions will prevent ring-fenced banks from providing some more complex wholesale products, such as complex derivatives to their customers.
Our approach to ring-fencing
In determining our approach, we’ve carefully considered our options and chosen an approach which we believe provides greater certainty for our customers while ensuring minimal disruption.
Santander UK plc will become our main ring-fenced bank in the UK. It will serve all our Santander personal customers in the UK, customers of cahoot and almost all of our business customers. Cater Allen Limited, which is known as Cater Allen Private Bank, will also be a ring-fenced bank. This means that for the vast majority of our customers there will be no change to the way in which we provide services to them.
Santander UK plc will also broadly, to the extent allowed by the legislation, continue to hold and serve our corporate banking business in the UK. Any products we can’t offer, or customers we can’t serve, from within the ring-fenced bank (which will include some Santander Global Corporate Banking business) will, in most cases, be provided or served by the wider Santander Group, notably Banco Santander, S.A.
Ring-fencing transfer scheme
We will be undertaking a ‘ring-fencing transfer scheme’ (UK Scheme) in order to transfer certain corporate and wholesale markets business between Santander Group members. This will form part of our activity to make sure we comply with the ring-fencing legislation. The UK Scheme requires the approval of the PRA (in consultation with the FCA) and the UK High Court (Court). A Skilled Person will also report on the UK Scheme to the Court.
A hearing is scheduled for 5 February 2018 for the Court to initiate the process to consider and approve the UK Scheme. At a second Court hearing, expected on 11 June 2018, the Court will be asked to give its final approval to the UK Scheme. If the UK Scheme is approved, the business transfers are expected to take effect from July 2018. More information about the UK Scheme will be available on this website nearer the time.
We are also expecting to conduct similar local transfer processes next year in Jersey and the Isle of Man in respect of our businesses there (CD Schemes), subject to relevant regulatory and court approvals.
You may have the right to participate in the UK Scheme process and to have your views heard in Court in relation to the UK Scheme. To do this you will first need to file a written statement with the Court following the first Court hearing in February 2018. At the same time, a copy must be sent to the PRA and Santander UK (if you are a customer of Santander UK) or Abbey National Treasury Services plc (if you are a customer of ANTS).
We will publish more details about the UK Scheme and about how to have your views heard nearer the time of the first Court hearing in February 2018.