From IOM Today

UK banking groups are drawing up detailed plans on how they are to restructure their operations in the island.

Treasury Minister Eddie Teare was quizzed in the House of Keys over what action his department would take to address issues raised by the recent Vickers report.

The Vickers report, commissioned in the wake of the 2008 global banking crisis, recommends the ring-fencing of UK banks’ retail arms from their investment banking and corporate finance activities.

These changes affect only the largest banking groups worth £25bn.

But Mr Teare, replying to a question from Peter Karran (LibVan, Onchan) told the Keys: ‘Critically, some of these have a presence in the Isle of Man and the other Crown Dependencies, namely Barclays, Royal Bank of Scotland, Lloyds Bank, HSBC and Santander UK.

‘A ring-fenced UK bank – or a ring-fenced group – will not be permitted to operate a banking subsidiary or branch outside the EEA. Therefore, a UK ring-fenced bank is not permitted to have a branch or subsidiary in the Isle of Man, or indeed other Crown Dependencies.

‘This means local operations of the banking groups will be part of the non-ringfenced divisions of those groups.’

Mr Teare said the individual banking groups affected have continued to develop and refine their plans, and submitted near-final ones to the UK regulator at the end of January.

He added: ‘The Financial Services Authority is now receiving more detailed information on how the banking groups plan to structure their operations locally, and will be working with each group over the next two to three years. At this stage, the final structure is not known.’

Mr Karran asked whether the proposed changes would expose banks in the island to do more towards the Depositors’ Compensation Scheme.

Mr Teare said a way forward for the DCS could not be worked out until the new structure of the banks in the island is known.

IMAGE: Eddie Teare, Treasury Minister
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