What is it?

Broadly, the term ‘ring-fencing’ refers to a change in the way the large retail (high street) banks are structured in the UK, a number of which have a presence locally.  In Guernsey, the banks affected are Barclays, HSBC, Lloyds and NatWest.

The banks that are being required by the UK government to undergo this restructuring, will be divided into a ring-fenced bank, for their UK personal and commercial clients, and a non-ringfenced bank, for all other customers.

In accordance with the new rules, customers in the Channel Islands and Isle of Man, cannot be included within the ring-fenced bank.        

Why has it come about?

Ring-fencing has been brought about by changes in UK law following the global economic crisis. 

The rules are not scheduled to come into force until 1 January 2019, although all the banks affected are aiming to complete their restructuring ahead of this date. 

What does it mean for you?   

If your bank has not already contacted you with information about how it is being affected by ring-fencing, you should expect to receive something in the coming months.  If you have any queries about how ring-fencing will impact you, you should contact your bank in the first instance.    

The local branches of the four banks who are undergoing ring-fencing in the UK will continue to be licensed and regulated by the Commission.

They will also continue to be members of the Guernsey Banking Deposit Compensation Scheme, just as they are now.  More information about the Scheme can be found here.