Ban on hedge fund loans

Europe’s biggest banks face restrictions on lending to hedge funds in a key MEP’s proposed amendments to a bank-structure bill now making its way through the legislature.

The draft European Union law, which would stop too-big-to-fail banks from proprietary trading and possibly require them to break up, should also include limits on hedge-fund lending, according to Jakob von Weizsaecker, who represents the European Parliament’s Socialists and Democrats Group in deliberations on the bill.

“The extra restrictions on lending to hedge funds would reinforce the proprietary trading ban,” Mr von Weizsaecker said in a interview. “We don’t want to ban prop trading at banks only to see them leverage hedge funds with debt.”