The European Commission is backing away from plans to force big banks to ring-fence their lending business from higher-risk trading activities, according to a draft proposal seen by the Financial Times.
The Financial Times reported this week that the proposal emanating from Internal Markets Commissioner Michel Barnier does not contain a mandatory separation, and that structural reforms would be less expensive and restrictive than initially called for, with national authorities given much flexibility in how to apply those reforms. For example, supervisors would be allowed to determine whether specific types of trading would present systemic risk and need to be fenced off from other parts of a bank’s business.
