those with ‘ core ’ retail deposits greater than £25 billion – are required to implement ring - fencing by 2019. currently, seven banking groups cross this threshold. between them, these groups have around £5 trillion of assets, both in the uk and overseas. the ring - fencing regime is designed to be consistent with the other parts of the post - crisis regulatory framework. the most systemically - important ring - fenced banks will be held to higher capital requirements. the systemic risk buffer will be applied to ring - fenced banks to ensure they are adequately capitalised and resilient to shocks. we expect ring - fenced banks to have, on average, around 1. 5 percentage points more high - quality ‘ tier 1 ’ capital than non - systematically important banks. 2 and a ring - fenced bank will not be able to be capitalised by debt raised externally by its group, which would give rise to so - called ‘ double leverage ’. overall, the bank estimates that ring - fenced banks ’ total loss absorbency will be, on average, around 27 % of their risk - weighted assets, higher than the 17 % recommended by the icb. 3 ring - fencing also helps improve the resolvability of the big uk banking groups. the resolution strategy for groups including ring - fenced banks will typically involve a bail - in at the level of the holding company. bail - in would recapitalise the relevant entity by passing losses up to the holding company to be borne by shareholders and debt - holders. this should stabilise the group. structural separation then provides authorities with additional options as part of any subsequent restructuring. ring - fencing, together with other elements of the post - crisis regulatory landscape, means that the key providers of important retail banking services are less likely to fail following a shock to the economy or the see bank of england ( 2018 ), financial stability report, june, page 44. see bank of england ( 2016 ), the fpc ’ s framework for the systemic risk buffer, may, box 2. all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx financial system. but if banks do get into trouble, there will be greater certainty that important banking services will continue to be provided without disrupting customers and without the need for government bail - outs. this is the key difference ring - fencing delivers should we experience a repeat of the financial crisis. what changes

increases the intensity of supervision, for the groups in scope. as such, ring - fencing will remain a focus for the pra – as well as for the banks themselves – in the coming years. how will the next crisis be different? financial crises generate significant and persistent costs. the bank of england has estimated that the costs of crises amount to 75 % of gdp on average. 1 the previous crisis resulted in the government providing £65 billion of capital to rbs and lloyds to prevent them failing and disrupting the provision of vital banking services to their customers. since then, a comprehensive regulatory reform package was developed – which in large part has now been implemented – to reduce the likelihood that such a crisis could happen again. brazier, a., ( 2016 ), ‘ a macroprudential approach to bank capital : serving the real economy in good times and bad ’, speech available at https : / / www. bankofengland. co. uk / speech / 2016 / a - macroprudential - approach - to - bank - capital - serving - the - real - economy - in - good - timesand - bad. all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx in 2010 the government established the independent commission on banking ( icb ) to make recommendations to improve financial stability and competition in the banking sector. the icb recommended that the core retail banking operations of uk banking groups should be ring - fenced from any international or investment banking activity in their groups. the icb argued that if retail banking operations had been ring - fenced prior to the crisis, this would have reduced the likelihood that the banks would have needed government support. the icb ’ s recommendations formed the basis of the banking reform legislation passed by parliament in 2013. this set out the core banking activities which must sit in a ring - fenced bank, as well as the ‘ prohibited ’ activities that must be separated from the ring - fenced bank or stopped altogether. the legislation also specified the degree of separation required. ring - fenced banks must have the capability to make decisions independently of their groups and should not be operationally dependent on group entities which undertake prohibited activities. ring - fenced banks must also have sufficient financial independence and have their own capital and liquid resources. any exposures to the rest of the group must be limited and on commercial terms. all large uk banking groups – defined as