The German government approved the draft law on the separation of banking activities in the Council of Ministers, following the example of France and Great Britain. The law provides for the separation of retail banking activities from those for own account when the latter, considered risky, exceed 20% of the total balance sheet or the threshold of 100 billion euros.
The law will especially affect the large credit institutions, such as Deutsche Bank and Commerzbank, respectively number one and two in the country, and the largest regional public bank, Lbbw, which have balance sheet assets of at least 90 billion. The law, which will enter into force on 2014 January 2015 but which leaves banks time to comply until July XNUMX, provides for the unbundling of risk assets into a separate entity and the development of plans for bank resolution in the event of crisis.
The criminal liability of bank managers and executives who deliberately assume excessive risks resulting in losses is strengthened, for which penalties of up to five years in prison and fines are foreseen.
