World Bulletin / News Desk
An EU advisory group will on Tuesday recommend reforms that could include splitting banks' retail business from their investment operations to protect savers and host nations from the kind of risk-taking that triggered the financial crisis.
Bank of Finland Governor Erkki Liikanen, who led the group of academics and experts set up by the European Commission, will announce their verdict on how best to reform bank structures in the wake of the crisis that began five years ago.
Making a separation between retail banking and high-risk businesses such as trading could be among the proposals Liikanen will make to stop crises in investment banking dragging down high street banks and the savers and businesses who depend on them.
Michel Barnier, the European Commissioner in charge of regulation, will give his initial response to journalists after Liikanen outlines the recommendations at a press conference at 1030 GMT.
Legally separating or ring-fencing investment banking would make it easier for the part of the bank that holds savers' deposits and lends to businesses to keep running even if other parts of the group collapsed, some banking experts say.
It would affect European banks such as Britain's Barclays , Germany's Deutsche Bank and France's BNP Paribas, which engage in high street banking alongside riskier trading in stocks, debt and other securities.
One source familiar with the group's work recently said separating retail banking from the high-risk business, dubbed "casino banking" by critics, would be part of the proposals, though this could change in the final report.
But European policymakers, struggling to contain the regional debt crisis and associated banking troubles, are set to give priority to creating a banking union that would eventually allow euro zone countries to jointly support banks.
Brussels is expected to pursue safeguards such as larger capital reserves for risky business or rely on new powers to be granted to the European Central Bank to keep banks in check.
Setting aside capital by holding back profits, for example, makes banks less risky for shareholders and taxpayers.
The European Commission, which writes the first draft of all regulation before it goes to the bloc's countries and parliament for approval, is not expected to act immediately on the recommendations, one EU official said.
The United States, is pursuing its own structural reforms through the introduction of curbs on proprietary trading, where banks trade for their own benefit and in doing so take on risk.
Britain chose safeguards for depositors by shielding that part of a bank's business after Royal Bank of Scotland's rush to extend its investment arm resulted in the largest state bailout of the crisis in Europe.
A panel of experts headed by John Vickers, a former chief economist at the Bank of England, recommended that the retail arms of banks be "ring-fenced" by a cushion of extra capital beyond the international norm and with "independent governance to enforce an arm's length relationship".
The British government has said it will implement his recommendations.
Oil prices rose above $60 due to Iran's call for oil production cut
Economic growth in the Euro-Zone is not at desired levels.
Director and Global Head of Islamic Finance at Standard & Poor's says that growing market for sukuk and new players mark 'significant interest' in Islamic finance.
The Ministry of Finance said that Denmark has written to China to "announce its intention to apply to be a founding member" of the AIIB.
Experts state that the crisis poses risks to the region, which is significant for oil production and exports in the world.
Federal Reserve removes word 'patient;' interest rate increase expected within months. Yellen says timing of rate rise 'not decided,' but will come anytime after April; holds current rates at 0 to 0.25 pct.
Many emerging-market currencies have fallen against the dollar in recent weeks
Anticipated Federal Reserve interest rate hikes making dollar strong against most emerging market currencies, Deputy Prime Minister Ali Babacan says.
European Statistical Agency says slight decline fuelled by drop in production of durable consumer goods.
EU will use all its foreign policy instruments to establish strategic energy partnerships with producing and transit countries.
Dollar strength and waning investor confidence are driving the lira lower
Greece has already received two bailouts totalling 240 billion euros but fellow euro zone member Ireland said last week that it would have to negotiate a third programme.
The Ukraine crisis has tested the loyalties of Bulgaria, a Balkan country with historical ties to Moscow and heavily dependent on Russian energy supplies.
Syria expels three United Nations aid workers hindering aid development in the country
Russia has overcome a "psychological barrier" and is ready to deepen its economic ties with China, Deputy Prime MinisterArkady Dvorkovich said
With Chancellor Angela Merkel's right-left coalition plus the opposition Greens, it was the biggest majority for any euro zone rescue package so far in the 631-seat chamber.