European Union won't seek law to separate banking activities: Report

LONDON: The European Union is set to drop financial reforms that would force big banks to ringfence their retail departments from riskier investment operations, the newspaper reported on Monday.

A draft European Commission paper, seen by the business paper, would no longer make banks automatically split operations and would give national supervisors more leeway in applying the reforms.

But the draft proposal, drawn up by EU Commissioner Michel Barnier, does add a "narrowly defined" ban on 30 big banks using their own money for trading, so-called proprietary trading.

The paper -- due to be published in late January or February -- will complete EU reforms to make banks safer and easier to wind down following the 2008 crisis.

The proposals follow up on the Liikanen Report into separating banks' riskier activities from the utility-like operations of retail banking.