Michel Barnier told the Financial Times that any implementation of last year’s Liikanen report on the structure of European banks would have to “preserve their diversity” and avoid “penalising” lenders that were supporting the economy.
The commissioner made clear that the Liikanen report’s central recommendation – that banks’ trading activities should be hived off into ringfenced, separately capitalised units – risked undermining fragile European growth outlook. “I don’t want to penalise the work of banks when they work for the benefit of the economy and industry”, Mr Barnier said on the fringes of last week’s World Economic Forum in Davos. “Clearly a part of marketmaking is linked to supporting the industry and the economy.”
Mr Barnier said he was keen to “move on as soon as possible from the agenda of reactive repair to a proactive agenda”.
One member of the Liikanen committee, who continues to advocate full adoption of the ringfencing recommendation, said last night that it was dangerous for policy makers to switch the focus to growth before the problems of the past were fixed. “There is a risk that a complacency about the rebound in markets means regulators revert to type and avoid structural action in a co-operative way”, Marco Mazzuchelli, now a senior adviser to Swiss bank Julius Baer, told the FT.
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