EU Buries Its Plans to Split Up Retail and Investment Banking

The European Union abandoned one of its most controversial efforts to rein in the banking industry since the financial crisis, concluding that the need to protect against too-big-to-fail lenders had been addressed in other ways.

The European Commission, the EU’s executive arm, on Oct. 24 said there is “no foreseeable agreement” on the legislation, which hasn’t progressed in parliament since 2015. The policy would have potentially split the retail units from riskier investment banking arms of major lenders such as Deutsche Bank AG and BNP Paribas SA, in a bid to boost financial stability.

The main “rationale of the proposal ...