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“We are worried that the benefits of the diversified banking approach reflected in Europe’s universal banking model may not be preserved for all banks”, declared Guido Ravoet, Chief Executive of the EBF, “and we are concerned over the proposal to ring-fence trading activities of the bigger banks into a separate part of the banking structure”.
The EBF calls on the European Commission to assess carefully the recommendations and their impact on the EU banking market, and by extension on the cohesion of the Single Market. “The Group suggests a new approach of mixing the Vickers and Volker reform models”, explained Ravoet. “We will need time to analyse the consequences of this proposal. Proper consultation period and impact assessments are therefore essential.”
The mandatory separation of trading activities from the deposit-taking activities for Europe’s bigger banks seems not to acknowledge fully the major regulatory changes already put in place and those still forthcoming. The European regulatory reform agenda has by now fundamentally re-balanced the banking landscape, particularly in terms of improved capital requirements, supervision, recovery and resolution of banks. It addresses the main concerns of regulators and has already led to significant restructuring of the market, while avoiding the need to revert to taxpayers’ money in the future.