The UK government is set to relax ring-fencing rules for banks, a move that will allow retail and investment banking operations to share back-office functions. This change, part of the Enhancing Financial Services Bill expected next week, aims to reduce compliance costs for major banks like Lloyds, NatWest, HSBC, Barclays, and Santander UK. The bill is part of a broader effort to streamline financial regulations and improve access to finance for UK businesses. Ring-fencing, introduced after the 2008 financial crisis, required banks to separate retail banking from riskier investment activities. The new rules will enable banks to use the same IT systems and compliance teams across divisions, potentially increasing operational efficiency. While Lloyds and NatWest may benefit most due to their domestic focus, HSBC and Barclays could also see significant gains from shared infrastructure. The changes apply to banks with over £35 billion in core deposits, leaving mid-tier and challenger banks unaffected.