Separate banking rules for the euro area and non-euro countries, proposed as part of the European Union's efforts to keep the U.K. in the bloc, were greeted with skepticism by lawmakers from Berlin to Brussels on concerns that they could damage the single market.

A draft EU-U.K. settlement published on Feb. 2 foresees the possibility of “different sets of union rules” on prudential requirements for banks and other measures to bolster financial stability for the bloc's nine non-euro states, including the U.K., and the euro area. This bifurcation may be necessitated by the need for “more uniform” rules for the currency bloc, according to the draft.

“A two-track approach to banking regulation would damage the European Union,” said Lothar Binding, the Social Democratic Party's lead lawmaker for finance in Germany's lower house of parliament. “It undermines the attempt to reach a level playing field within Europe. This approach would create chaos in the financial system in Europe, which the EU aims to avoid. It reflects a tendency toward renationalization.”