On July 3, 2018, following its announcement in its 2018 Work Programme of its intention to withdraw 15 pending EU legislative proposals, the European Commission announced the formal withdrawal of that legislation, which includes the 2014 Proposal for a Regulation on structural reform of the EU banking sector.
The original proposal built on the 2013 recommendations of a high level expert group on reforming the structure of EU banking sector, chaired by Bank of Finland Governor and ECB Governing Council member Erkki Liikanen. For banks within its scope, the provisions of the proposed regulation would have imposed a ban on proprietary trading and would have empowered supervisors to require banks to ring-fence certain trading activities from a deposit-taking entity.
The rationale given for withdrawal of the proposed regulation is that no agreement on the proposal was foreseeable, the proposal having made no progress since 2015. In the meantime, the financial stability objective of the proposed regulation has been met by other regulatory measures in the banking sector, notably the entry into force of the Banking Union's supervisory and resolution arms. Under the Bank Recovery and Resolution Directive, for example, resolution authorities can require banks to make structural changes preemptively if that is needed to make them resolvable.
The Commission press release is available at: http://europa.eu/rapid/midday-express-03-07-2018.htm?locale=en#3 and the rationale for withdrawal is available at: https://ec.europa.eu/info/sites/info/files/cwp_2018_annex_iv_en.pdf.
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