# Ring-Fencing

*Regulation & Compliance — Finicade finance glossary*

Ring-fencing legally separates a bank retail deposit business from its investment banking, with separate capital, so trading losses cannot reach deposits.

Ring-fencing legally separates a bank's retail deposit-taking business from its investment banking, with separate capital and governance, so a trading loss cannot reach insured deposits. The UK implemented it after 2008 as an alternative to full Glass-Steagall separation. It raises costs by fragmenting capital and liquidity, which is the trade-off deliberately accepted for containment.

**Also known as:** ringfencing, structural separation, bank ring-fence

**Related terms:** [Living Will](https://finicade.com/glossary/living-will), [Glass-Steagall Act](https://finicade.com/glossary/glass-steagall-act), [Volcker Rule](https://finicade.com/glossary/volcker-rule), [Commercial Bank](https://finicade.com/glossary/commercial-bank), [Systemic Risk](https://finicade.com/glossary/systemic-risk)

Source: https://finicade.com/glossary/ring-fencing