The UK’s biggest lenders, including Lloyds Banking Group Plc (LON:LLOY), will find out this week whether they could bypass rules governing the independence of boards which will oversee their ring-fenced retail operations, The Times has reported. The part government-owned lender is said to be preparing to apply for an exemption to the requirement for a separate board.
Lloyds’ share price has lost ground in today’s session, having shed 1.10 percent to 87.01p as of 10:16 BST. The shares are underperforming the benchmark FTSE 100 index which has slipped 0.41 percent lower to 7,002.93 points so far today.
Under new rules, due to come into force in 2019, UK banks with more than £25 billion in deposits will separate their retail operations from riskier investment banking, with the new units having their own board, capital and support services such as IT.
The Times reported today that Lloyds was preparing to apply for an exemption to the requirement for a separate board, with the rules still being finalised by the Prudential Regulation Authority (PRA). The lender, which intends to put 95 percent of its business within the ring-fenced entity, will reportedly argue that two separate boards would be unnecessary given how small the remainder of its business would be.
The Times quoted the PRA chief executive Andrew Bailey as commenting that Lloyds’ circumstances provided a ‘good example’ of reasons to seek a waiver. He, however, declined to comment on whether one would be granted.
Lloyds is not the only blue-chip lender expected to seek a waiver to the boardroom rule. Last week, news emerged that HSBC Holdings (LON:HSBA) had held preliminary talks with the PRA, during which the Asia-focused bank had signalled that it might want to appoint Alan Keir, the chief executive of HSBC Bank, as chair of its ring-fenced operations.