10 July 2013

Joint German and French response to EC consultation on banking sector

The French and German governments have recently introduced national bills that aim at separating speculative activities form other banking activities, largely following the findings and recommendations by the Liikanen High-Level expert group.

Reforms in Germany and France are based on the following observations and principles:

• The bills aim at decreasing the complexity of banks, increasing their resolvability, and reducing the risks for depositors, customers and taxpayers. The reforms are an additional regulatory element, complementing the new rules on enhanced capital and liquidity requirements as well as on resolution. The bills do not aim at substituting European rules but at promoting such rules.

• The French and German governments fully share the view put forward by the HLEG that no particular banking model seems to have an advantage in terms of robustness, resilience and financial stability. The HLEG acknowledged that universal banks bring benefits in terms of client service and more broadly that investment banking activities usefully contribute to the financing of the economy. Against this background, the established and proven European universal banking model should not be jeopardised but further improved by separating speculative activities of certain banks on a functional basis.

• It is of vital importance to secure that no activities have to be separated that serve the financing needs of the economy. A wide prohibition of capital market activities within banks could also lead to unexpected and undesirable consequences in terms of market structure, by putting greater pressure for a consolidation of capital market activities within the banking sector, or by favouring the growth of the shadow banking system.

France and Germany are willing to support a European initiative provided a balanced approach is reached in terms of activities’ usefulness, of supervisory flexibility and of absence of single market fragmentation. A comprehensive impact assessment of structural reforms with respect to other reforms is still needed alongside with a robust subsidiarity assessment.

Full statement 

© Bundesregierung