Commission confirms banking structural reform proposals: The Commission has published its detailed proposals for banking structural reform. The proposals take the form of two Regulations.
- The proposed Regulation on structural measures improving the resilience of EU credit institutions (the Bank Structural Reform Regulation - BSRR) will apply to "too big to fail" banks, which are European banks (i) deemed to be of global systemic significance or (ii) that have over €30 billion in total assets and trading activities exceeding €70 billion or 10% of the bank's total assets. The Commission says this will capture around 30 of the 8,000 banks operating in the EU. The BSRR will catch all subsidiaries and branches of these banks and also foreign branches operating in the EU (but with a third country equivalence regime). The main elements of the BSRR are:
- a proprietary trading ban with a few exceptions;
- the right for supervisors to require separation of trading activities if they expose a certain bank to excessive risks. The decision would relate to specified activities and there would be rules on cooperation between supervisory and resolution authorities, rules on effecting the separation and a requirement for banks to have a separation plan. Trading entities that have been subject to the separation obligation would not be allowed to take deposits eligible for protection under deposit guarantee schemes or provide associated retail banking services; and
- overall control of supervision for the consolidating supervisor where (as will usually be the case) the bank operates across a number of Member States.
The Commission wants the proprietary trading ban to apply from 1 January 2017 and the separation of other trading activities by 1 July 2018.
- The proposed Regulation on Reporting and Transparency of Securities Financing Transactions (Shadow Banking Regulation - SBR) is intended to increase transparency of transactions in the shadow banking sector to stop banks from moving activities into that sector to circumvent other rules. The SBR would require all transactions to be reported to a central database and mandate detailed reporting from investment funds engaged in securities financing transactions. It also sets out minimum conditions for rehypothecation of financial instruments.
Commission publishes EU-US financial services position: The Commission's Directorate-General for Trade has published a "non-paper" clarifying its objectives for financial services in its negotiations with the US under the Transatlantic Trade and Investment Partnership (TTIP). Its aims include mutual consultations in advance of proposed changes that might affect how financial services are provided between the EU and the US and a commitment to assessing equivalence. (Source: Commission Publishes EU-US Financial Services Position)