Should National Australia Bank opt to retain its banking business in the UK, it may need to adapt its capital planning to meet the minimum requirements proposed in the final report of the Independent Commission on Banking, published last night.The commission proposed a "ring-fence buffer" for medium-sized banks - such as NAB's Clydesdale Bank - of between one per cent and three per cent of the bank's risk-weighted assets, or roughly an extra £500 million on top of the "minimum" level of capital the commission proposes, which must be equal to seven per cent of risk-weighted assets. NAB has equity of around £2.7 billion in Clydesdale Bank at present and risk-weighted assets of around £33 billion.At March 2011, NAB put its core capital ratio at Clydesdale Bank at 9.6 per cent, based on existing methods of working out capital ratios. Were the recommendations of the ICB adopted - and industry opposition as well as that from elements within the Coalition Government is likely to be stiff - then NAB may need marginally more capital in Clydesdale on the basis of the present composition of its business.The object of the ring-fencing (which was foreshadowed in the ICB's interim report earlier this year) is to, as far as practical, isolate the activities of retail banks, which the commission believes must hold much more capital than the investment banking arm of a banking group. The proposed Basel III standards would have to apply to the capital ratios of the wider banking group, the commission acknowledged. A second set of recommendations of the commission may affect NAB's decision-making in Britain.As expected, the commission revised its view of the proposed sell-off by Lloyds Banking Group of more than 620 branches.Rather than increase the number of branches being sold the commission now wants the sale "enhanced" to give the buyer of this group of branches a market share of more than 4.6 per cent of personal bank accounts, as Lloyds proposes at present.The report states that "ensuring the emergence of a strong new challenger is more important [promoting competition by several new entrants] and should be prioritised in progressing the recommendations contained in this report. "This should be effected by ensuring that the entity which results from the divestiture has a strong funding position and sufficient scale." The report proposes that Lloyds act to ensure that the loan-to-deposit ratio of the portfolio being sold is "comparable with or better" than the typical ratio for the industry in Britain, and which the report estimates at being in a range of 100 per cent to 130 per cent.As proposed by Lloyds, the loan-to-deposit ratio for the branches would be around 200 per cent, something already identified as a hurdle to a sale.The report proposes that Lloyds sell a portfolio equal to a market share of at least six per cent of personal accounts.