30 January 2013

AGB on German draft legislation to ring-fence risks and plans for the recovery and resolution of banks

“The bill’s proposals to separate out trading activities are totally precipitate and should not be rushed through”, said Michael Kemmer, General Manager of the Association of German Banks, in Berlin today. This was because it was completely unclear what effect the plans would have on the European banking market, the universal banking system and on funding the economy. The EU’s Internal Market Commissioner, Michel Barnier, had rightly highlighted this point recently. “So before the German government goes ahead any further with proposals to separate out trading activities, it should wait for the results of the European Commission’s planned impact assessment on the Liikanen Report”, Kemmer added. The Federal Financial Supervisory Authority was also taking an in-depth look at the consequences of the measures under discussion.

“There is as yet no evidence that separating out trading activities increases financial stability. In consequence, there is no need for this overhasty legislative initiative”, was Kemmer’s assessment. Only a few weeks ago, he pointed out, Germany’s major business associations had joined the banking industry in calling for the retention of the German universal banking system in the interests of growth and employment.

The approach of the proposed measures for recovery and resolution planning was basically sound, in Kemmer’s view: banks need to consider more carefully in the future what action they themselves could take at an early stage to avert impending financial difficulties. But regulation along these lines was already being discussed in the context of a proposal for a European Directive. National legislation was therefore premature, especially since EU-wide requirements are to take effect only in 2015. “So a coordinated European approach is needed in this area too”, Kemmer stressed.

Press release

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