EBA has delivered its opinion on the recommendations of the report by the High-level Expert Group on reforming the structure of the EU banking sector (the Liikanen report). It welcomes the fact that the report preserves the benefits of the universal banking model by keeping trading activity in a separate entity within the group, rather than mandating a complete spin-off. To avoid transfers between the deposit bank and the trading entity, EBA stresses that treatment of credit institutions’ intra-group exposures will need to be harmonised, as the current second Capital Requirements Directive (CRD2) offers exemptions. More generally, EBA calls for an impact assessment on how the recommendations in the report would affect the cost of capital and funding for trading firms, and the consequences for investment banking in Europe. (Source: Opinion of EBA on Liikanen Report)