For the UK's largest banking groups, 1 January 2019 marked not only the advent of a new year, but the formal switching on of the UK's ?ring-fencing? regime. A product of the Independent Commission on Banking (ICB) established by the then incoming 2010 coalition government, ring-fencing involves the separation of retail and commercial banking from investment and international banking. The intention behind this major banking reform is that ring-fenced banks have financial and operational independence from other parts of the banking group - so, in the event of a future banking crisis, greater assurance can be placed on the continuity of core banking services.

The ring-fencing regime is designed to be consistent with other elements of the post-crisis regulatory regime, including higher capital and liquidity standards, and more deliberate recovery and resolution planning. It has involved a hugely complex process in which the completion of the statutory and regulatory regime over several years has been followed by careful strategic planning, independent review and court approval prior to plans being put into action.

This process involved the five largest UK banking groups - those with over £25 billion of core retail deposits, transferring over £800 billion of assets between legal entities - as estimated by the Prudential Regulation Authority (PRA). It also involved some 1.3 million retail and corporate customers who needed to be allocated new sort codes. In most cases this was completed with account holders needing to take little or no action. Instead, customers may have noticed that their bank may have notified them of limitations with their online banking service during the phased implementation weekends.

While it will be some time before the economic effects of ring-fencing can be analysed - the ICB assessing that its recommendations should not only create a more stable banking environment but contribute to the competitiveness of UK financial services and, therefore, the economy - the turn of the year marked the completion of the delivery phase. Ring-fencing has been a multi-year, multi-billion pound infrastructure project spanning our largest banking groups and it has been delivered within the statutory timeframe set by parliament with no fanfare, just the quiet contentment on the part of the project teams involved for a job well done.

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