Lloyds has taken the most pro-ringfence stance of all the banks – and argues that almost all of Lloyds’ operations should be inside the fence.
Chief executive António Horta-Osório (pictured) argues that a ringfence should form a crucial part of a resolution plan to allow regulators to wind up failing banks in an orderly way.
Analysts estimate that Barclays would be worst hit by a ringfence, although chief Bob Diamond (pictured) insists that its investment bank does not use the retail bank for funding.
Barclays opposes a retail ringfence and instead suggests “operational subsidiarisation”: ringfencing off the bank’s infrastructure like payments systems.
HSBC has the least skin in the game compared to rivals and will take a only small hit. Chairman Douglas Flint (pictured) sees the measure as unnecessary given the avalanche of other regulation in the works.
However, Flint suggests that if it must be brought in, it should divide assets on an accounting basis, with mark-to-market assets outside the retail ringfence.
Like Barclays, RBS will suffer substantially from a ringfence. Chief Stephen Hester (pictured) argues that a ringfence could actually damage financial stability by concentrating risk-taking in a ringfenced retail bank that has an effective state guarantee.
Hester argues that bail-in debt – bonds that turn into equity – would better discourage risk-taking.