AFME warned that EU proposals to force banks to set up legally separate trading entities likely would drive up lenders' funding costs and prompt them to rein in lending. The proposals were made by an advisory group led by European Central Bank Governing Council member Erkki Liikanen. "If the Liikanen proposals are implemented as they stand, there is a serious risk that the capital markets will be unable to meet Europe's financing needs at this time of very subdued bank lending," according to AFME.