Banks may need another £3.3 billion to cover ringfencing costs

Britain’s biggest banks will have to hold up to £3.3 billion of extra capital between them when they are forced to ringfence their high-street banking from their riskier investment banking activities in 2019.

The Bank of England detailed how banks will have to change to create ringfencing which it hopes will stop so-called casino banking activities dragging down core personal and business banking, as almost happened during the financial crisis.

Andrew Bailey, deputy governor of the Bank and chief executive of the Prudential Regulation Authority (PRA), said: “Making our firms more resilient has been at the forefront of our post-crisis reform agenda.”

The new rules are designed to prevent the need for any future taxpayer bailout of the UK’s six largest banks after the £65 billion which had to be pumped into Lloyds and Royal Bank of Scotland in 2009.

The PRA also released plans to ensure “continuity of service” if part of a bank fails.

That includes making sure that areas such as IT keep on running even if one area of the bank has gone under.

This would add a further one-off cost of 5% and an annual cost of 3% to operating costs.

The watchdog estimated that could amount to £200 million once and £120 million annually for the average large bank.