France wants to split banks' trading, lending ops

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Associated Press

Posted on December 19, 2012 at 7:02 AM

Updated Wednesday, Dec 19 at 7:04 AM

PARIS (AP) — France's government is proposing to split banks' risky trading activities from their more traditional lending operations as part of a Europe-wide effort to shore up a fragile industry that contributed to the continent's financial crisis.

A bill presented Wednesday by President Francois Hollande's Socialist administration would force banks to house any trading done for their own profit in a separate subsidiary.

The goal is to prevent deposits from being used in speculative activities; banks would still be allowed to leverage deposits for activities considered to the benefit of the economy, like lending to companies.

The bill also calls for the shareholders to be the first in line to rescue troubled banks, and it would create a bailout fund financed by the banks themselves.

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