UK bank profits 'set to drop 15%' after ring-fencing

Proposals to ring-fence UK-based banks could dent profits by up to 15% within three years, according to Morgan Stanley research, the Telegraph has reported.

The Morgan Stanley research highlighted the costs to banks of operating their UK retail and small-and-medium sized corporate banking businesses as ring-fenced subsidiaries. Royal Bank of Scotland is set to be hit the hardest, with ring-fencing estimated to cost the bank £1.4bn a year by 2014, or 15% of its forecast pre-tax profits. RBS' share price dropped from a high of 36p per share to a low of 20p during the recent weeks of volatility, standing today at roughly 23p. Barclays will also suffer significantly, the paper suggests, with the estimated cost of ring-fencing of its UK ret...