The industry has been waiting for the “high-level” opinions of the Liikanen Report, and its prescriptions for reform of the turbulent European banking sector. The reforms, while suggestions rather than binding Policy (as Barnier continues to remind everyone) call for huge changes to how European banks operate.
The biggest development of these is a Volcker-style separation of prop trading from banking activities and potential ring-fencing of retail operations. Additionally, the report calls for changes to the bail-in tool and stronger governance and control of banks.
This will surely provide much fodder for debates at the upcoming G20 meeting, but especially for the debate raging in Europe over the single rule book and supervisory mechanism. The ball is now in Michel Barnier’s court to respond.
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