Stalled EU bank trading plan could end up on scrap heap
By Huw Jones
LONDON (Reuters) - A European Union draft law to curb risky trading at banks could be scrapped unless there is consensus on it among the main parties, a senior European Parliament member said on Tuesday.
The reform, which needs joint approval from EU States and the bloc's parliament to become law, seeks to stop banks from engaging in excessive risky trading which has the potential to bring them down.
First proposed by the European Commission two years ago, it has faced fierce opposition from banks who say they have been inundated by tougher rules since the financial crisis.
EU states have already approved a version, but parliament has been unable to vote through a text, with lawmakers disagreeing over how "automatic" the separation of trading activities into a separate legal entity should be.
Centre right parties insist on a form of wording that would give regulators discretion, so they are not bound by set triggers or other requirements that make it hard for supervisors not to split up banks.
"It all depends on whether the socialist group can accept it," Gunnar Hoekmark, the Swedish centre-right lawmaker who is steering the measure through parliament, told Reuters.
But Jakob von Weizsaecker, the German lawmaker negotiating on behalf of the main centre left party, said he wants banks to show they are safe, with options for regulators if they are not.
"We are in favour of a reversal in the burden of proof to the effect that in the future, banks will have to demonstrate to the satisfaction of their supervisors that they don't pose a systemic risk," von Weizsaecker told Reuters.
The argument is that such a test would shield regulators from legal challenges if they split up a bank, but some lawmakers fear this test would be impossible to pass.
Hoekmark said no further vote is scheduled and if there is an insistence on "implicit or explicit automaticity", then "there will be no legislation at all and I regret that".
"It's almost an opportunity for the Commission to withdraw the proposal, but that is not my main option. My main option is that we should reach responsible agreement," Hoekmark said.
Discretion on separation was crucial to avoid harming investment in Europe as banks help companies raise funds, he said. Regulators already have powers to split up a bank under the bloc's new recovery and resolution rules.
"I have patience. We are not in a hurry that we need to get something in place," Hoekmark said.
(Editing by Louise Heavens and Alexander Smith)
