BERLIN: Germany aims to introduce legislation on banking separation in order to protect customers' deposits from riskier areas of business, according to a draft law seen by AFP on Wednesday.
The government wants the law to come into effect in January 2014 and banks' activities to be separated by July 2015.
It will only apply to institutions with balances sheets over 1.0 billion euros or with risky positions worth 20 pe rcent of the balance sheet value, according to the law.
The rules would affect Germany's two biggest banks, Deutsche Bank and Commerzbank, as well as regional banking giant Landesbank Baden-Wuerttemberg (LBBW).
Banking separation is an idea floated by the head of the Finnish central bank and European Central Bank governing council member Erkki Liikanen as a measure for reducing risk in the banking sector.
But one of Deutsche Bank's co-chief executives, Anshu Jain, has repeatedly slammed the idea, saying it would "greatly harm the German economy and German companies."
He argues that if Deutsche Bank can no longer use deposits to refinance its activities in investment banking, the refinancing costs would automatically rise and that would narrow the financing possibilities of major companies.
At the same time, banks with high deposits would find it difficult to find attractive investments for customers, Jain said.
- AFP/jc
Germany drafts law on banking separation
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Germany drafts law on banking separation
