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Bank Separation May Face Higher Hurdles in EU Lawmakers' Deal

  • Main EU Parliament groups find compromise on bank structure
  • Proprietary trading ban included in preliminary deal on bill
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Breaking up European Union banks would be tougher under a compromise reached by lawmakers from the two biggest groups in the European Parliament setting out rules to split up banks that mix trading activities with deposit-taking. They have also agreed to an EU-wide ban on proprietary trading.

The deal, which still needs plenary approval, gives banks more leeway to prove that they don’t pose a systemic risk than do previous proposals, and allows regulators to impose a capital increase as an alternative to a breakup, according to lead legislator Gunnar Hoekmark from the conservative European People’s Party, who struck the deal with his counterpart from the Social Democrats, Jakob von Weizsaecker. The final wording of the pact is yet to be published.