The high-level expert group on reforming the European Union’s banking sector, appointed in November 2011, presented its report to the European Commission on October 2 2012.
The report recommends actions in five areas:
* Mandatory separation of proprietary trading and other high-risk trading activities,
* Possible additional separation of activities conditional on the recovery and resolution plan,
* Possible amendments to the use of bail-in instruments as a resolution tool,
* A review of capital requirements on trading assets and real estate related loans, and
* A strengthening of the governance and control of banks.
The group’s chairperson, Bank of Finland Governor Erkki Liikanen, said “The report contains the Group’s recommendations for further reforms of the banking sector, including structural reform.
“Building on the substantial measures already under way, I believe that the Group’s recommendations would if implemented provide for a safer, more stable and efficient banking system serving the needs of citizens, the EU economy and the internal market.”
Internal Market and Services Commissioner Michel Barnier said “This is an important report that will inform our policy on regulating the financial sector.
“The report underlines the excessive risks taken by banks in the past, and makes important recommendations to make sure that banks work in the interest of their customers”.
Barnier said that he would now consider the next steps, in which the European Commission will look at the impact of these recommendations both on growth and on the safety and integrity of financial services.
“We need to look at these questions also in light of the financial reforms that I have already put on the table of the European Parliament and the Council,” he said.
(Photo: Vangelis Thomaidis)