UPDATE 1-Bank of England to finalise ringfencing rules in 2016

* PRA says no major changes to initial proposals

* To consult further with banks through this year

* Final rules to be published in H1 of next year

* Banks have to Jan. 1, 2019 to implement changes (Adds further details)

By Matt Scuffham and Steve Slater

LONDON, May 27 (Reuters) - The Bank of England said it willfinalise rules designed to protect banks' domestic retailcustomers from riskier parts of their operations in the firsthalf of next year.

The BoE's Prudential Regulation Authority (PRA) said onWednesday it had made a number of amendments to its originalproposals but didn't consider that responses to its initialproposals had necessitated major changes.

The regulator said it intends to undertake a furtherconsultation with banks during 2015 and will publish final rulesnext year to give firms sufficient time to implement the changesahead of a Jan. 1, 2019 deadline for their implementation.

The changes are designed to avoid a repeat of the bankfailures seen during the 2007-9 financial crisis, during whichBritain rescued Royal Bank of Scotland and LLoydsBanking Group at a combined cost of 66 billion pounds ($102 billion) to taxpayers.

The British Bankers' Association, a lobby group for theindustry, had said in January it wanted the process of settingout the new rules speeded up, warning of the workload faced bybanks to meet the deadline.

Banks say meeting the 2019 deadline will be difficult asthey must set up separate IT and operational systems.

PRA Chief Executive Andrew Bailey told Reuters earlier inMay that banks were still making big changes to how they plannedto implement the changes.

Some industry observers have said other regulatory changesand structural reforms within the banks had made the need forring-fencing redundant, but Martin Taylor, the former Barclays CEO who was on the panel that recommended theseparation, on Friday knocked back that suggestion.

"It remains the ungrateful job of supervisors to save thebanks from themselves," Taylor said.

($1 = 0.6497 pounds) (Editing by David Holmes)