4.2. Banks and Investment Firms: Common Rules and Differences in the EU

4.2.1. Banks

According to EU legislation, banks can develop any kind of financial business except

  • Asset management activity
  • Insurance activity
  • Non-financial activities unrelated to financial activities

Nevertheless, banks are allowed to hold equities of AMCs, insurance companies, and non-financial firms. Some countries have fixed rules due to the specific relationship between banks and non-financial firms. According to EU rules, if a bank invests in equity, it must cap the investment because equity investments, as well as other banking assets, impact regulatory capital.

The caps applied are similar throughout Europe, with the exception of Germany where there are no ...

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