Barclays May Dodge Regulatory Bullet

NEW YORK ( TheStreet) -- Barclays ( BCS) and RBS ( RBS) came out of a UK government review relatively unscathed after threats to leave the country if new regulations became reality.

A draft report by the Independent Commission on Banking issued Monday said that it is unlikely they will require banks which combine retail and investment operations to be broken up. Instead, they may have to have to, "ring-fence" each division.

The restructuring may be costly for banks such as Barclays and Standard Chartered. Barclays, HSBC ( HBC) and Standard Chartered ( STAN) have all said they would leave London if proposals by Sir John Vickers and the committee to reform the UK banking system were too restrictive.

Lloyds ( LYG) was the main loser of the review and may have to dispose of more branches, according to published reports. The bank is already in the process of selling a 600 branch network, according to The Wall Street Journal.

A final report by the Independent Commission on Banking is due out in September and reforms are likely to take place in 2012.

--Written by Maria Woehr in New York.

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