HM Treasury has published a report setting out reforms to the UK bank ring-fencing regime aimed at making it more agile and proportionate while preserving core protections for depositors and financial stability. The package centres on a new Growth Allowance that would allow major banks to use a limited portion of their balance sheets more flexibly, which the Treasury says could enable up to GBP 80 billion of additional financing for UK businesses. The reforms would also give the Prudential Regulation Authority more flexibility to update and tailor the detailed rules over time by moving more of the regime from legislation into regulatory rules. That is intended to let the PRA remove outdated requirements and adapt the framework to wider banking reforms more quickly. Banks would also be able to offer a broader range of products and services to support growing firms, including better hedging tools and greater access to programmes delivered through the British Business Bank and National Wealth Fund. The government also says the regime will remain proportionate over time through regular reviews of key thresholds and reporting requirements. Set out in the report Safeguarding Stability, Enabling Growth, the reforms are due to be delivered through the forthcoming Enhancing Financial Services Bill and subsequent legislation. The government will consult on the detail of the changes, with ring-fenced banks continuing to operate independently from investment banking activities.
HM Treasury2026-05-18
HM Treasury sets out ring-fencing reforms and new Growth Allowance that could unlock GBP 80 billion for UK businesses
HM Treasury has outlined reforms to the UK bank ring-fencing regime to make it more agile and proportionate while maintaining depositor and financial stability protections, including a new Growth Allowance that could support up to GBP 80 billion of additional financing for UK businesses. The reforms would shift detailed requirements from legislation into Prudential Regulation Authority rules and enable banks to offer a wider range of products and services to growing firms. The package, set out in the report “Safeguarding Stability, Enabling Growth,” will be implemented through the forthcoming Enhancing Financial Services Bill, with ring-fenced banks remaining operationally separate from investment banking activities.