Banks with branches or subsidiaries in the Isle of Man are continuing to make arrangements to comply with UK ring-fencing reforms.

Ring-fencing arrangements must be in place by January 1, 2019.

It’s a major plank of reforms to protect and strengthen the UK financial system following the global financial crisis which began in 2007.

The largest UK banking groups, including Santander UK, have to comply with the new requirements to ring-fence their retail activities including current accounts, savings accounts and payments.

However, banks in the Isle of Man will be outside the UK ringfence - and customers are being notified of the changes taking place.

Chris Till, the new president of the Isle of Man Bankers’ Association, explains what the impact will be here in the island.

He said: ’Ring-fencing has been introduced into legislation by the UK government following the recommendation of the Vickers Report into the issues with UK banks during the financial crisis and the fact that the UK government had to bailout a number of banks.

’Ring-fencing affects the Isle of Man to the extent that those banks on the island, which are part of large UK high street banks and along with those in the other crown dependencies, will likely to be outside the ringfenced bank in the UK.

’Other banks on the island which are not part of UK Banking groups are largely unaffected.’

Mr Till said those banks affected will be putting their plans in place over the next 12 months or so and in some cases banks have already communicated their plans to clients.

This may include new websites, mobile services and new debit/credit cards.

He added: ’Banks will be communicating any changes directly to their clients and via their websites.

’As with all communication received from banks. clients should ensure that it is a genuine communication before taking any action or providing any information.’

One of the banks that will see changes is Santander.

Its businesses in Jersey and the Isle of Man, operating under the brand name ’Santander International’ and ’Santander’, are currently part of Santander UK plc.

But under the new rules, a ring-fenced bank is restricted from having branches or subsidiaries outside of the European Economic Area.

It is therefore proposing to transfer its Isle of Man and Jersey businesses from Santander UK plc to another entity within the Santander Group.

All customers will receive a letter explaining the changes relating to the proposed business transfer in the coming months.

Santander UK plc will become the main ring-fenced bank in the UK. Any products it can’t offer, or customers it can’t serve, from within the ring-fenced bank will be provided or served by the wider Santander Group, notably Banco Santander, S.A.

Santander said: ’We are also expecting to conduct similar local transfer processes next year in Jersey and the Isle of Man in respect of our businesses there, subject to relevant regulatory and court approvals.’

Santander is among the largest UK banking groups that will have to comply with the new requirements