France unveiled a long-awaited bank reform, hailing it as a model for the rest of Europe even as critics said it fell short of President Francois Hollande's campaign pledge to get tough with the financial sector, reports Reuters.
The overhaul - which asks banks to house their proprietary trading units in separate, self-funded entities - will leave most of French lenders' investment banking activities untouched, handing a victory to BNP Paribas, Societe Generale and other banks, after months of intense lobbying.
It is closer in spirit to the U.S. "Volcker Rule" - a complex attempt at cracking down on banks' prop trading - than the more radical U.K. reform recommended by the Vickers Commission aimed at getting banks to shield retail activities to avoid a repeat of the 2008 financial crisis.
By keeping French banks' combined model of commercial and investment banking intact, the government has tilted the law's balance in favor of keeping credit flowing to the stagnant French economy as opposed to stringent financial regulation.
"I did not want to weaken the French banking system. I want it to be strong," said French Finance Minister Pierre Moscovici.
He told a news conference the plan could even point the way for similar laws elsewhere in Europe, adding that Germany was also considering a similar reform.
Bank of France head Christian Noyer, speaking late on Tuesday, defended the plan, calling it "optimal" for France's economy, which has been stagnating in recent quarters and may end the year in decline, recent figures suggest.
Read more of this report from Reuters.