The German cabinet approved Wednesday a raft of tougher new banking rules to shore up the financial sector against future crises and make banks and insurers shoulder more of the responsibility should they go bust. In draft legislation which must now be passed by parliament, the government wants large banks to separate their different areas of activity in order to protect customers\' deposits from riskier areas of banks\' operations. The rule will apply to institutions where high-risk operations such as high-frequency trading or hedge-fund financing make up either 20 percent of the balance sheet value or surpass 100 billion euros ($135 billion) in value. The banks concerned will be required to transfer their risky businesses into legally and financially separate units. affect Germany\'s two biggest banks, Deutsche Bank and Commerzbank, as well as regional banking giant Landesbank Baden-Wuerttemberg (LBBW). The law also requires banks to draw up so-called \"wills\" or emergency plans for restructuring or winding down once they get into financial difficulty. And high-level managers and executives will face up to five years in jail if they are found guilty of neglecting their risk management duties and allow their company to get into financial difficulty. \"No financial market, no financial player and no financial product can escape supervision,\" Finance Minister Wolfgang Schaeuble said in a statement. \"We\'re establishing step by step a new regulatory framework for the financial markets,\" he said The legislation would tackle directly the shortcomings that make the financial system vulnerable to crisis and also tackle the \"lack of responsibility on the part of banks and bankers,\" Schaeuble said. Banking separation is an idea promoted by the head of the Finnish central bank and European Central Bank governing council member Erkki Liikanen as a measure for reducing risk in the banking sector. But one of Deutsche Bank\'s co-chief executives, Anshu Jain, has repeatedly slammed the idea as harmful both to the German economy and German companies. He argues that if Deutsche Bank can no longer use deposits to support its activities in investment banking, refinancing costs would automatically rise and that would narrow the financing possibilities of major companies. The BdB German banking federation agreed. \"The draft legislation will undermine Germany as a financial centre,\" complained BdB president Andreas Schmitz. \"The measures approved by the cabinet today are folly,\" he said, slamming them as cheap populist measures by politicians with an eye on the general elections later this year. \"There is no evidence that separating off trading activities will lead to greater stability on the financial markets,\" Schmitz argued. Instead of rushing ahead with its own unilateral national regulatory measures, Germany should wait for new rules to be established at a European level, he said.