The bank was the first of five institutions to seek court permission to separate out its retail banking activities from its riskier investment bank under new government reforms which are designed to make the banking system safer and to protect ordinary customers and taxpayers from footing the bill for bank bailouts.
Sir Geoffrey Vos, chancellor of the High Court said he would agree to the ringfencing plans by Barclays and he dismissed concerns that the new structure could have an adverse effect on members of Barclays pension scheme.
During the court hearings last month to approve the scheme, almost 100 pension scheme members had expressed concerns that Barclays planned to use its non-ringfenced bank as the sponsoring entity for its £35bn defined benefit pension scheme. Members complained that the pension scheme, which has a £7.9bn deficit and 230,000 members, would in future be reliant on the solvency of the riskier investment banking business which could go bust.
In his ruling to approve the split, the chancellor agreed that the new measures agreed with Barclays pension trustees would provide sufficient support for the pension scheme. He said that his initial concerns had been “completely assuaged” and added that alternative proposals including dividing the pension fund into two schemes would be “entirely unworkable”. The non ringfenced bank will have assets of about £900bn compared to the £200bn of assets in the ringfenced bank and would also generate most of Barclays future attributable profit, he noted.
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