Ring-fencing transfer scheme

FAQs

 

As part of the implementation of our ring-fencing plans, we’ll be undertaking a legal process known as a ‘ring-fencing transfer scheme’ (the ‘Scheme’). The purpose of the Scheme is to enable us to transfer certain parts of our business between Santander Group companies, so we comply with the ring-fencing requirements by 1 January 2019.

The approval process

We sought approval of the Scheme from the Prudential Regulation Authority (‘PRA’), in consultation with the Financial Conduct Authority (‘FCA’) and the High Court of England and Wales (the ‘Court’). This entailed a four-stage process:

1. Application

The PRA consented to our application for the Scheme, having reviewed and approved (in consultation with the FCA) a report that described the effects of the Scheme. This report was prepared by an independent expert, John Cole of Ernst & Young LLP (the ‘Skilled Person Report’). The Skilled Person Report considered whether the Scheme is likely to adversely affect persons other than Santander UK and Abbey National Treasury Services plc (‘ANTS’) and, if so, whether the adverse effect is likely to be greater than is reasonably necessary to achieve the ring-fencing purposes of the Scheme.

2. Directions hearing

At a hearing that took place on 5 February 2018, the Court approved the sending of formal Scheme communications and the advertisement of the Scheme.

3. Case management conference

A case management conference took place at Court on 25 May 2018 to discuss process at the sanction hearing.

4. Sanction hearing

A hearing took place on 11 and 12 June 2018 when the Court approved our Scheme, taking into account the Skilled Person Report and the Skilled Person Supplementary Report, any objections raised and the views of the PRA and FCA.

The relevant business transfers under the Scheme are therefore expected to take place on 9, 16, 23 and 30 July 2018.
 

More about the proposed changes

The proposed changes are explained in more detail in the following documents:

Order
This is the Order under which the Court approved the Scheme, following the sanction hearing.

The Scheme
This is the legal document that sets out the transfers of business and certain other changes that will take place under the Scheme.

Summary of the Scheme
This is a summary of the key features of the Scheme.

Skilled Person Report
This is a report on the effects of the Scheme prepared by an independent expert, John Cole of Ernst & Young LLP.

Summary of the Skilled Person Report
This is a summary of the Skilled Person Report.

Supplementary Skilled Person Report
This is an update to the Skilled Person Report, prepared by an independent expert, John Cole of Ernst & Young LLP.

Addendum to the Supplementary Skilled Person Report
This is an addendum to the Supplementary Skilled Person Report, prepared by an independent expert, John Cole of Ernst & Young LLP.

Press and Gazette notices
These are notices published in a number of UK newspapers, as well as the London, Edinburgh and Belfast Gazettes. The notice states that the High Court has been asked to sanction the Scheme, and sets out certain details of the Scheme.

If you would like to receive a printed copy of any of these documents, or require the documents in an alternative format, please write to us at Santander Ring-fencing Department, 1/3S, 287-301 St Vincent Street, Glasgow, G2 5HN, call us on 0800 023 2091 or email us at ringfencing@santander.co.uk.

FAQs

Will ring-fencing be a legal requirement?

Ring-fencing will be a legal requirement for certain UK banks with effect from 1 January 2019. Any banking group that has more than £25 billion of UK deposits from individuals or small businesses will be affected by ring-fencing. In general, within these groups any UK bank that holds deposits from personal or small business customers will be a ring-fenced bank.

Will all banks subject to ring-fencing have to adopt the same approach?

No. There are different ways for banks to meet the requirements of ring-fencing legislation, so banks subject to ring-fencing can be expected to adopt different approaches depending on their structures, strategy and customer base. This means customers of different banks may be affected in different ways.

Which regulators will ensure Santander UK will comply with ring-fencing requirements?

All plans for ring-fencing are being reviewed by the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). The PRA is the lead regulator responsible for identifying which banks are within the scope of the ring-fencing legislation and for supervising banks’ implementation of the prudential rules. The FCA is working with the PRA, the Bank of England, HM Treasury and the banks that will be subject to ring-fencing from the commencement of the regime to support the banks’ implementation of ring-fencing efficiently and on time.

Santander is a Spanish bank, so why does it need to adhere to UK banking laws?

Banco Santander, S.A. is a global banking group and each of its subsidiaries, including Santander UK, operates as an independently capitalised stand-alone business. Santander UK plc, Cater Allen Limited and Abbey National Treasury Services plc are each incorporated in the UK, are subject to UK legislation and are authorised by the UK Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA) and the PRA. Banco Santander, S.A. is authorised and supervised by the European Central Bank and by the Bank of Spain, and its London branch is also subject to limited regulation in the United Kingdom by the FCA and the PRA.

 

What is a ring-fencing transfer scheme?

A ring-fencing transfer scheme is a legal process that facilitates transfers of business to create a ring-fenced bank.

Part VII of the Financial Services and Markets Act 2000, provides for a process leading to a court order to facilitate transfers of insurance or banking business. The Financial Services (Banking Reform) Act 2013 added a process for transfers of business in connection with the creation of a ring-fenced bank known as a ring-fencing transfer scheme.

The purpose of a ring-fencing transfer scheme is to enable banks to restructure their businesses in order to comply with the ring-fencing requirements that will apply from 1 January 2019.

 

What is the purpose of Santander’s ring-fencing transfer scheme?

The purpose of our ring-fencing transfer scheme is to enable us to restructure certain parts of our business to comply with the ring-fencing requirements that will apply from 1 January 2019.

Under the Scheme:

  • Certain corporate and wholesale markets business will be transferred between Santander UK plc, Abbey National Treasury Services plc and Banco Santander, S.A. London branch.
  • With effect from 1 January 2019, all liabilities of Santander UK plc and Abbey National Treasury Services plc under the existing cross-guarantees issued by each of them in respect of the liabilities of the other will be released and those cross-guarantees unwound.
  • Certain other changes will be made to the terms and conditions of some contracts.