EU draft law agreed to curb banks’ risky trading

EU finance ministers have agreed on a draft law to rein in trading risks at banks that exempts Britain’s lenders because they already face similar curbs.

The deal marks a coup for Britain whose own banking reform will be accepted as a substitute for the EU law as the country gears up for a referendum on its membership of the 28-country club, with financial services a key focus.

At a meeting yesterday, the bloc’s finance ministers gave the green light to the new EU rules, aimed at preventing a repeat of the 2007-09 financial crisis. Talks will now start with the European Parliament on the final text to become law.

“The structural reform of banks is a very central element to completing the reform of promoting banking stability,” Janis Reirs, finance minister of EU president Latvia, told the meeting.

The draft law will apply to banks with trading operations of above €100bn and was proposed by the European Commission in January 2014. But discussions have been protracted as Britain, France, and Germany have their own rules to stop risky trading getting out of control.

National regulators would also have more discretion than originally envisaged when separation of trading takes place.