Germany said it is seeking a common position with the French government over how to apply new EU bank safety rules, a move that could allow Deutsche Bank to sidestep a division of its business.
An EU advisory group came up with the idea last October of a legal separation between commercial and investment banking operations in an attempt to shield taxpayers from having to fund further bailouts and to protect savers from any more banking collapses. But a French proposal put forward in December stopped short of forcing a legal separation, allowing lenders to maintain combined commercial and investment banking operations.
On Wednesday the German finance ministry said: "We are in contact with the French government about the current French proposal, and are working on a way to advance the implementation of the Liikanen proposals on a national and European level"...
Finding a pan-European consensus that the French agree with makes it less likely that Deutsche Bank will be forced legally to split its traditional deposit-taking business from most market-making and trading activities. Germany's BdB bank lobbying association said on Wednesday that full legal separation amounts to overregulation and could damage the German economy...
In another step towards tighter banking regulation, Germany wants to be able to force banks to be wound down or restructured and to restrict their legal rights if ordered to take steps to ensure they are not too big to fail, according to a working draft law seen by Reuters on Thursday.
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