Europe risks Volcker-Vickers banking fudge

[LONDON] Michel Barnier's banking reforms may have been watered down, but they could yet prove dangerous for Europe's banks. The European Commissioner for the internal market is weeks away from releasing the final plan for making the region's financial system safe.

It is likely to include a ban on proprietary trading - already being dubbed the "Barnier rule" - and restrictions on market making, according to people familiar with the situation.

Prop trading - banks trading on their account purely for the sake of making money - is risky but it was not the central cause of losses in the financial crisis. What's more, regulatory pressure has already forced banks to cut back. France and Germany have both passed laws to allow the practice within separately capitalised institutions.