In an open letter sent yesterday to the French finance Minister, Pierre Moscovici, Finance Watch warns that the draft bank reform would fail to deliver President Hollande’s pledge to separate the credit activities of banks from their trading activities.
The French draft law will be announced next Wednesday, 19 December, the day after a key report on UK ringfencing is due.
The French reform had initially been proposed as a radical structural reform but is now being presented as a curb on proprietary trading among France’s largest banks, designed especially not to interfere with their universal bank business model.
Thierry Philipponnat, Secretary General of Finance Watch, said:
“When he was on the campaign trial, candidate François Hollande recognized that credit and trading are different economic activities and should be separated.”
“The draft text we have seen suggests this will not happen. It will be an essentially cosmetic reform: credit and trading will still be mixed, and trading will still be subsidised.”
“The text contains giant loopholes for derivatives and hedge fund businesses.”
“Our view is only reinforced by the upbeat reaction of French bank leaders in response to the proposal.”
Other reform ideas are on the table in Europe:
In the UK, a key parliamentary report on bank ringfencing is due on December 18. The British reform would ringfence retail operations of large banking groups via the draft Banking Reform Bill, now under scrutiny by the Parliamentary Commission on Banking Standards led by Andrew Tyrie MP.
At a European level, the Liikanen proposal, suggests a separation of trading from other activities.
In Germany, SPD chancellor candidate Peer Steinbrück calls for separate divisions within banks in order to limit the shifting of losses in a crisis.
For further information or to interview Thierry Philipponnat, please contact:
Greg Ford, head of communications, on +44 7703 219 222 or firstname.lastname@example.org
Charlotte Geiger, communications officer, on +32.2.401.8741 or email@example.com
Aline Fares, advisor to the Secretary General, on +32.2.401.8744 or firstname.lastname@example.org
NOTES FOR EDITORS
In the UK, the Parliamentary Commission on Banking Standards was asked to report on the Banking Reform Bill no later than 18 December 2012, and on other matters as soon as possible thereafter (http://www.parliament.uk/business/committees/committees-a-z/joint-select/professional-standards-in-the-banking-industry/news/appointment-of-commission/).