Brussels, 23/06/2015 (Agence Europe) - The Ecofin Council's agreement on the draft regulation to introduce structural measures in the banking sector, if applied in its current format, would risk “unforeseen consequences” on liquidity, capital markets and growth, fears the European Banking Federation (EBF).
The EBF says any reforms that lead to prudential measures to isolate the riskiest investment banking from high-street banking “could lead to a loss in European investment capacity equal to 5 percent, representing a decline of almost €100 billion in capital expenditure in the long term. Any further reform of the banking sector also needs to take into view the new, significantly different regulatory and economic environment.”
The Ecofin Council's agreement in principle gives supervisory bodies the power to impose structural measures (hiving off the riskiest investment banking into subsidiaries, greater capital requirements) on the fifteen or so big European banks whose investment business is above €100 billion. The agreement requires the compulsory hiving off of proprietary trading. (Mathieu Bion)