High Court sanctions Lloyd’s ring-fencing scheme

The High Court has sanctioned an application by Lloyds Bank PLC, Bank of Scotland PLC and Lloyds Bank Corporate Markets PLC for a ring-fencing scheme. This is the second scheme to come before the courts and be approved, after Barclays Bank plc and Woolwich Plan Managers’ was approved in March. RBS’ scheme has been sanctioned by the Scottish Court of Session, while HSBC and Santander have applications pending.

Barclays chose to comply with the ring-fencing requirements by transferring the core activities to a ring-fenced body, so the transferor would conduct the “excluded” (riskier) and other prohibited activities. Lloyds’ application takes the opposite stance, so that most of the existing business and customers will remain with the transferor entities, with the excluded and other prohibited activities being transferred to and carried on by a new entity. The Scheme is intended to become effective on 28 May but would be permitted to slip to 16 July.