Brussels shies away from forcing banking sector split

-A +A

In a draft proposal, the European Commission appears on course to step back from earlier plans that would rigorously force large banks to hive off their lending business from their risker trading operations.

The Financial Times reported yesterday (6 January) that such separation would no longer be mandatory, and “would be less costly and restrictive than first envisaged and national supervisors are given wide discretion in applying the reforms”.

The report was based on a leaked legislative proposal expected to be published by Internal Market Commissioner Michel Barnier in late January or February, which will aim to implement the findings of the 2012 Liikanen report on the structure of banking (see background).

Finnish central banker Erkki Liikanen’s report was contentious because it proposed the mandatory separation of proprietary trading and other high-risk trading, resisted by France and Germany in addition to most big European banks.

According to the Financial Times report such a ban would only now apply to around 30 big banks, and national supervisors would be left to make the decision of whether certain types of trading posed a “systemic risk” and so should be separated.

Barnier’s proposal will not become law before the end of his tenure as commissioner this year, leaving his successor to deal with the finer elements of the negotiations.

However the proposal also gives national supervisors the option of demanding tougher standards from their banks.

“There is no formal proposal from the Commission at this stage. So any text seen is merely a draft, subject to substantial change, and has no political endorsement from the College,” read a statement from the Commission, although the EU executive stepped back from denying the substance of the Financial Times report.

Barnier’s proposal will “ensure all banks can be resolvable and not require taxpayer bailout when they face difficulties,” the statement said, adding: “At the same time, while we solve "too big to fail' (TBTF), we want to do it in a way that avoids upsetting the economic recovery. That is why the proposal will ensure that financing of real economy is not impeded.”

Timeline: 
  • Late Jan.-early Feb. 2014: Internal Market Commissioner Michel Barnier to publish proposal designed to implement Liikanen report
External links: 
Advertising

Comments

international foundation for research and innovation  's picture

In parale with what must be done EU must recommend Austria and Luxembourg to create alternative business opportunities which can bring high profit in very short time Like this they will succed to keep a big parte of their investors who are ready to leave EU

international foundation for research and innovation  's picture

Very important If you make a search about Luxembourg banking secrecy beford you finish typing the entire phrase it appear the world secrecy That it means a large number of World wild strategics investors ,entrepreneurs are searching for this phrase Taking into consideration this EU must recommenr Luxembourg to do what must be done in such a way when investors and entrepreneurs will search for those phrases they can find immediatly a list of businesses oppotunities which bring more than 25 % profit in less than 75 days and different video with entreprenerus talking about how they are taking advantages from those business opportunities

international foundation for research and innovation  's picture

Very important 2
In the previous post we had presented an information which are demonstraitng that a large number of investors and entrepreneurs are searching in the internet for Luxembourg banking secrecy In this new post we are going to show that when world wild investors are searching just for the expression Banking secrecy it appear automatically linked with Singapore and Switzerland This mens that a lot of investors who are ready to leave Austria and Luxembourg had been searching for those expression in Switzerland and Singapore Because of this it must be done something in such way when they will do those searches they can find a list of business opportunities which can be done in Austria and Luxembourg and which bring more than 25 % profit in less than 75 days Those are priorities actions which those countries must do