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Banking group in talks to save investment function

February 17, 2014

LONDON: Lloyds Banking Group is in talks with Britain'sPrudential Regulation Authority over "ringfencing" rules in an attempt to save its investment banking functions, the Financial Times reported.

The state-backed group is concerned that the cost of operations after ringfencing takes effect may outweigh the benefits, forcing the group to shut investment banking activities and operate as a retail business alone, said sources familiar with Lloyds.

The bank and the Prudential Regulation Authority could not immediately be reached for comment.

Ringfencing for banking groups in the UK is scheduled to be implemented by 2019. It is expected to force big banks to separate their retail banking operations from investment banking, in line with the recommendations of the Independent Commission on Banking, which was led by Sir John Vickers.

The FT quoted people familiar with the matter saying Lloyds was in talks with the regulator to allow it to operate a "lower" ringfence so its retail and investment banking activities would not be rigidly separated.

"Given that we are predominantly a retail and commercial bank, we would expect to be less affected than other major UK banks by the implementation of a retail ringfence," a Lloyds representative told the FT. - Reuters

Cape Argus

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Source: Cape Argus (South Africa)

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