On October 2, the European Commission published the final report on reforming the structure of the EU banking sector by the high-level expert group chaired by Erkki Liikanen.  The group was established by the Commission in February 2012 in order to assess whether additional reform targeting the structure of individual banks would reduce potential failures and better protect retail clients.

The final report recommends the following steps, which the Commission will consider in light of its proposed legislative reforms:

• o    Changing banks’ capital requirements, particularly in the areas of trading assets and loans relating to real estate;
• o    Mandatorily separating proprietary trading from other significant trading activities, ensuring that they are legally separate from a deposit bank;
• o    Permitting supervisors to require the further separation of activities to aid resolvability;
• o    Reforming governance and remuneration arrangements; and
• o    Amending certain of the bail in proposals contained in the proposal for the Resolution and Recovery Directive of June 2012.