RBS retail operations to be ring fenced by end of the month

The still 72 per cent state-owned bank has announced the initiative, which is intended to protect taxpayers during a financial crisis by separating the retail and investment arms of Britain’s major banks, will now take effect on 30 April.

The announcement comes just days after Barclays became the UK’s first major bank to complete the process when some 24 million customer accounts and £250 billion of assets were moved into its newly-formed ring-fenced bank, Barclays Bank UK.

Barclays Bank UK is now separate from Barclays Bank, which offers products and services for larger corporate, wholesale and international clients.

The retail bank will also have its own board and capital requirements.

As with Barclays, once implemented, Edinburgh-based RBS own ring fencing scheme will allow its more risky investment divisions to fail without the bank needing state support, as it did in 2008 in the form of a £45 billion taxpayer bailout.

RBS’s retail customers fall under it brands including RBS, NatWest and Ulster Bank.

The non-ring-fenced bank will be made up of clients from NatWest Markets, NatWest International, RBS International and Isle of Man Bank.

RBS said customers should not see any disruption to services as a result of the changes, which will be made during the weekend leading up to 30 April.

The ring fencing reforms were conceived in 2011 by a commission led by Sir John Vickers, and have cost the five major banks - Barclays, HSBC, Lloyds Banking Group, RBS and Santander UK - billions of pounds to implement.

Ring-fencing rules only apply to UK banks that hold more than £25bn in core deposits from individuals and small to medium-sized businesses.

UK banks started working through the ring-fencing process last year and have until January next year to complete it.

Lloyds has said its date for transfer is 28 May, while Santander and HSBC have dates in July, if approved by the High Court.