Finance Watch response to EC Consultation on Banking Structure

11 July 2013

Consultation response

11 July 2013 – Finance Watch today published its response to the EC’s consultation on a reform of the structure of the EU banking sector.

The key points from our response include:

  • Separation will render banks more resolvable in the heat of a crisis.
  • A strong EU proposal will avoid “a race to the bottom” via weak national initiatives.
  • Market making and underwriting are trading activities and should be separated from deposit-taking, along with other capital market activities.
  • The private costs of bank structural reform will bring large social benefits by limiting the cost of future banking crises and reducing the economic distortions caused by bank funding subsidies.
  • Ex-ante bank separation is necessary to achieve the goals of bank structure reform; separation cannot be left to the discretion of national supervisors.
  • The Commission’s Option E (HLEG) is the minimum approach to be considered, and Options H and I, where all trading activities are separated from a narrow deposit-taking entity, are the preferred approaches from a public interest point of view.