Barnier faces opposition to plans to curb activities of about 30 large banks

Michel Barnier, the European Union’s financial services chief, faces opposition to his plans to curb the activities of about 30 of the bloc’s largest banks to prevent them being too big to fail.

While France and Germany say parts of his proposals may hamper lending and threaten an exodus of banking services, MEPs argue the plans have simply come too late for them to review and approve ahead of May elections. Many will have left office or switched jobs by the time the assembly votes on the measures.

“It’s a bit insulting to present this now,” Sharon Bowles, chairwoman of the EU assembly’s economic and monetary affairs committee, said.

“Barnier should have presented this much sooner before the election, or not at all. The deadline for the parliament to receive new, non-emergency, proposals before the elections expired in July last year.”

Mr Barnier’s initiative, which would ban the lenders from proprietary trading and hand regulators the power to split them up, are seen as a “cornerstone” of the EU’s fight against too-big-to-fail lenders that has dominated his five-year tenure. Mr Barnier, whose term ends on Oct 31, has argued for EU-level regulation responding to a flurry of national measures in the bloc and the US, where regulators last year approved a proprietary trading ban, the Volcker Rule.

“These proposals are the final cogs in the wheel to complete the regulatory overhaul of the European banking system,” Mr Barnier said in a statement.

The bank-structure rules are part of a package of Mr Barnier’s measures which were announced yesterday that include a draft law targeted at so-called shadow banking.

Bloomberg