France adopts watered down banking reform
AFP/The Local · 18 Jul 2013, 17:54
Published: 18 Jul 2013 17:54 GMT+02:00
France adopted a banking reform on Thursday aimed at preventing a repeat of the 2008 financial crisis but that critics said fell short of promises by President Francois Hollande to get tough on bankers.
The upper house Senateapproved the law, which will force France's major banks to move some of their trading operations to subsidiaries.
Critics of the banking sector have called for banks to be forced to strictly separate all trading activities from deposit-taking, protecting savers and taxpayers from potentially risky investments.
But the law only forces banks to move purely speculative trading into separately funded entities, leaving many trading activities attached to deposits.
The reform also bans high frequency trading, the controversial practise of having super-computers carry out ultra-fast trades, and commodity derivatives trading, which is thought to disrupt food prices.
The law will also require banks to make public a list of their global subsidiaries and worldwide activities, in a bid to shine a light on tax havens and fiscal fraud.
On the campaign trail before his election last year, Socialist Hollande had vowed to get tough on bankers, describing the "world of finance" as his "enemy".
But his government backed away from fully separating retail banking from speculative trading, after the banking sector warned it would reduce investment needed to get France's recession-hit economy back on track.
High-risk trading by banks that threatened depositors' savings was a leading cause of the 2008 financial crisis, which saw major banks bailed out at taxpayers' expense.