EC lays out risk plans for 'too-big-to-fail' banks

The proposals from Michel Barnier, the European commissioner for the internal market and financial services, would ban large banks from proprietary trading and hand national regulators the power to split them up.

“Today’s proposals from the European Commission have much in common with the banking reforms the UK has pioneered and have been designed to allow the UK to go ahead with full implementation of its reforms,” said a government spokesman.

“As the commission has acknowledged, the Government’s Banking Reform Act already meets, and in some places exceeds, the proposed standards, putting the UK at the forefront of European and global efforts to create safer banks, without taxpayer subsidies that distort the European single market.”

However, Alexandria Carr, regulatory lawyer at international law firm Mayer Brown, warned that the commission’s proposals could clash with Britain’s plans for bank reforms.

“The UK has not taken a prohibitive approach,” she said, unlike the EU, pointing out that despite planned separation of wholesale and investment banking, some proprietary trading would still be permitted within a UK bank.

Mr Barnier’s proposals are a step back from a 2012 EU report that recommended making all banks completely separate their day-to-day retail operations from the high-risk trading widely blamed for setting off the 2008 global crash.

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