Germany’s finance ministry is under fire for proposing reforms to shield taxpayers from the cost of future crises that critics say are less ambitious than existing EU plans.

Berlin plans to compel lenders to hive off higher-risk trading activity from their main banking business – but only when the related assets exceed €100 billion or 20 per cent of its balance sheet.

Obligations to create a separate entity for proprietary lending above this ceiling would be likely to affect only a small number of German financial institutions. The Berlin proposal also forbids retail banks from engaging in high-frequency trading or redirecting deposits for hedge fund activities.

Similar proposals – though without the ceiling – were presented four months ago by an EU advisory group headed by Finland’s central banker Erkki Liikanen.

German opposition politicians called it a “placebo” law, aimed at calming voters without providing any added protection to inconvenience banks.