Barnier: EU to create rival Vickers ring-fence regime

EUROPE will propose its own regulations for structural reform of the banking sector within months, EU commissioner Michel Barnier declared yesterday, throwing open the possibility of a rival proposal to the Vickers Commission being imposed by Brussels.

Barnier told reporters yesterday: “Before the end of January, I will put in place, in agreement with [European Commission] President [Manuel] Barroso, a high-level group on the prevention and separation of risks in banking institutions.”

As to the timeline, he said: “This group will have several months, let's say from January to June, to bring forwards proposals and ideas on this important subject.”

Chancellor George Osborne suggested that the interest in Vickers’ proposal to ring-fence retail activities from investment banking operations meant the UK had shown “intellectual thought leadership”.

But the development of another parallel regulatory agenda alongside Britain’s finance reform could be a major headache for the government and the City.

Already, the Treasury and Bank of England are locked in negotiations over European capital rules that do not give member states enough flexibility to implement UK policies.

Barnier’s intentions add structural change to a long list of financial reforms in which Britain is struggling to keep its sovereignty – and on which banks desperately need clarity.

Barnier did not go into detail yesterday on what the group will examine. But in December he said: “We need time to study what the British government, to study what the American government intend to do and to listen to the response of the European banking sector in all its diversity.”