ECB bank ap­pli­ca­tion con­cern

Irish Independent - Business Week - - BUSINESSWEEK -

FEWER than 10 of the ap­prox­i­mately 40 banks that con­duct EU busi­ness out of Lon­don have ap­plied so far for a li­cence to con­tinue bank­ing in the bloc af­ter Bri­tain leaves, reg­u­la­tory sources have told Reuters.

The slow pace of ap­pli­ca­tions is rais­ing con­cern at the Euro­pean Cen­tral Bank, the EU’s top bank­ing su­per­vi­sor, that some lenders are not do­ing enough to pre­pare for Brexit, or may even avoid its watch through a gap in the rules.

The past two months have seen a pick-up in the num­ber of banks say­ing they plan to set up new EU sub­sidiaries af­ter Brexit, with most ma­jor US, Bri­tish and Ja­panese banks say­ing they will es­tab­lish units in Frank­furt or Dublin.

But su­per­vi­sory sources say they have still seen few for­mal ap­pli­ca­tions for li­cences.

“We’re hav­ing lots of meet­ings but not enough con­crete ac­tion,” one su­per­vi­sor said.

While Bri­tain does not leave the EU un­til March 2019, bank ex­ec­u­tives have said time is al­ready run­ning out: it could take 18 months or more to set up a new sub­sidiary, given the need to re­lo­cate staff, get the req­ui­site tech­nol­ogy and change con­trac­tual ar­range­ments with EU clients.

The lo­ca­tion of in­vest­ment banks’ Euro­pean head­quar­ters is a ma­jor is­sue dur­ing Bri­tain’s ne­go­ti­a­tions to leave the EU. Com­pa­nies across the bloc de­pend on banks whose Euro­pean arms are now mainly based in Lon­don for fi­nanc­ing.

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