A senior EU source has said that Europe will not imitate US President Barack Obama's plan to limit banks' size and trading activities.
The source - described as 'close to financial policy-making' - was quoted by Reuters as saying: 'We understand the US position and we understand his reasons. But I can't see the EU going down this route.'
Read more reaction to the plans here
Obama's dramatic proposals, announced on Thursday, would prevent banks from investing in, owning or sponsoring a hedge fund or private equity fund, and set a new limit on banks' size in relation to the financial sector.
They could also bar institutions from proprietary trading operations, which are unrelated to serving customers, for their own profit.
But the EU source said the 27-nation bloc would instead focus on raising banks' capital requirements and tightening financial regulation, pursuing initiatives already underway in the European Parliament.
Last year, the EU proposed draft laws expanding official supervision of the financial industry across the union, and raising the requirements for capital that banks must set aside to cover risk in their trading books.
'What is key to remember is that the US is one market, the EU is 27 markets and we are trying to encourage cross-border financial services and more importantly consolidation in both national and trans-national markets. The Obama plan would be anti-competitive in EU terms,' the source was quoted as saying.
He also said the EU did not have so many banks that were 'too big to fail', adding that Europe had already started restructuring banks and forcing them to sell off some of their businesses.
Publicly, senior officials in France, Britain and Germany on Friday offered support for Obama's plan but stopped short of saying they would follow suit.
