Athens, 02/04/2014 (Agence Europe) - At the Ecofin Council in Athens on Wednesday 2 April, ministers' first debate about reform of banking focussed on the importance of dealing with market making.
Market making is one of the big issues raised in draft legislation unveiled by the same in January, explained a European source. A number of member states point out that hiving off market making into a separate part of a bank would impact on the financing of the real economy, said the source. Germany, France and Spain have already pointed this out and are calling for impact assessments to be made of how the planned measures would impact on the economy.
In the draft regulation, the Commission suggests giving bank supervisory bodies the option in some cases of forcing big banks to hive off risky trading, such as market making, complex derivatives, complex securitisation and lending to capital investment funds, into legally separate body with separate accounts, unless the bank can demonstrate that the activities are not a risk (see EUROPE 11007). The idea behind this is to ensure that any losses on investment do not negatively impact on retail banking (deposits and payment systems).
Given a progress report on technical work at Council level, the chair of the Economic and Financial Committee, Thomas Wieser, listed the main outstanding issues - the regulation's scope of application, an outright ban on banks doing proprietary trading, extending member states' discretionary powers and equal treatment among member states vis-à-vis national measures that have already been taken.
Greek Finance Minister Yannis Stournaras said that work was proceeding as planned, but would not be finished until after the end of the Greek Presidency of the Council of the EU. The director general of DG Internal Market at the European Commission, Jonathan Faull, said the ministerial debate had established a framework for the negotiations, and member states recognised that the question needed to be dealt with at EU level in order to prevent fragmentation of the internal market. German Finance Minister Wolfgang Schäuble said there would be plenty more discussion on the matter. (MB)