Banks & Asset Managers (AO) | Cost benefit analysis of UK ring-fencing reform

Research evidence excerpt

Banks & Asset Managers (AO) | Cost benefit analysis of UK ring-fencing reform

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# Cost category Barclays Lloyds NatWest Key sizing driver

(GBPm) (GBPm) (GBPm)

1 Governance 20 15 25 NatWest: 3 RFB entities vs. 1–2 for others

2 Treasury operations 35 25 30 Barclays: larger BBPLC MREL programme

3 Regulatory reporting 15 12 20 NatWest: 3-entity disclosure burden

4 Intra-group legal compliance 20 15 20 Broadly similar; NatWest higher due to entity count

5 Duplicate IT infrastructure 50 40 45 Barclays CIB tech stack most complex

6 Duplicate operational headcount 35 28 33 Broadly similar; Barclays higher given dual-bank staffing structure

Total gross ring-fence sustainment cost c.175 c.135 c.173

Source: Kepler Cheuvreux

We apply two filters to derive the net addressable saving: (i) what % of each cost category is addressable by the reform, and (ii) for

Barclays specifically, what % of the addressable saving has already been captured by Barclays Execution Services (BX).

Barclays Execution Services Limited (BX) has been the group's shared-service vehicle since ring-fence implementation in 2019. BX

provides IT infrastructure, technology platforms, operations, HR, finance and risk support to both BBUKPLC and BBPLC under a

ring-fence-compliant IGA framework.

Table 4:Addressable cost savings by category

Cost category Addressable % Barclays Gross Lloyds Gross NatWest Gross

(KECH estimate) (GBPm) (GBPm) (GBPm)

Governance 0% 0 0 0

Treasury operations 60% 21 15 18

Regulatory reporting 0% 0 0 0

Intra-group legal compliance 50% 10 8 10

IT infrastructure 75% 38 30 34

Operational headcount 70% 25 20 23

Gross addressable saving c.94 c.73 c.85

Barclays BX deduction (pre-captured by existing shared-service company) (c.40)

Adjusted gross addressable saving c.54 c.73 c.85