ECB hopes to min­imise fi­nan­cial ser­vices dis­rup­tions by eas­ing lengthy en­try test

New Straits Times - - Business -


BANKS in Lon­don that re­lo­cate op­er­a­tions to the euro­zone af­ter Brexit are likely to be spared a lengthy en­try test by reg­u­la­tors, mak­ing it eas­ier for them to shift, ac­cord­ing to two of­fi­cials with knowl­edge of the mat­ter.

The Euro­pean Cen­tral Bank (ECB), the euro­zone’s banking su­per­vi­sor, has had many in­quiries from Bri­tish-based banks want­ing to come un­der its watch, prompt­ing it to look at fast­track­ing li­cence ap­pli­ca­tions, said sources.

It was set to tem­po­rar­ily waive an ex­am­i­na­tion of the fi­nan­cial mod­els that big re­tail lenders and in­vest­ment banks used to de­ter­mine the risk of a de­fault on a mort­gage or de­riv­a­tive — as long as the banks met the stan­dards of Bri­tish reg­u­la­tors, they said.

Any such de­ci­sion by the ECB would be chiefly for prac­ti­cal rather than po­lit­i­cal rea­sons and would aim to min­imise dis­rup­tion to Euro­pean fi­nance af­ter Bri­tain’s exit from the Euro­pean Union, said one of the peo­ple.

“Re­sources are limited. We would find a way of do­ing it (ap­pli­ca­tions) quickly,” said the of­fi­cial. “The Euro­pean fi­nan­cial sys­tem wants to con­tinue to func­tion.”

Such a waiver would nonethe­less serve to speed up banks’ re­lo­ca­tion plans and help re­shape Europe’s fi­nan­cial land­scape by ex­pe­dit­ing the process of Frank­furt, Paris, Lux­em­bourg and Dublin win­ning busi­ness from Lon­don.

Bri­tish Prime Min­is­ter Theresa May will trig­ger di­vorce pro­ceed­ings with the Euro­pean Union on March 29, launch­ing two years of ne­go­ti­a­tions that will help de­ter­mine the fu­ture of Bri­tain and Europe.

While the fi­nal terms for do­ing busi­ness with the EU from Bri­tain are un­cer­tain, May has made it clear that Bri­tain will leave the sin­gle mar­ket that al­lows banks in Lon­don to sell their ser­vices across the bloc.

Fi­nance ex­ec­u­tives say pri­vately they ex­pect Brexit to iso­late Lon­don and want to es­tab­lish bases inside the EU from where they can ac­cess its mar­ket.

Mean­while, Dublin has emerged as one of the favourites for Lon­don-based banks seek­ing un­in­ter­rupted ac­cess to the bloc post-Brexit, with Stan­dard Char­tered Plc, Bar­clays Plc and Bank of Amer­ica Corp likely to choose the city for their new EU hubs, an in­dex of 15 cities com­piled by a re­lo­ca­tion com­pany showed.

Though Ire­land tied for the high­est top in­come tax rate, at 52 per cent, it ben­e­fited from be­ing the only other English-speak­ing des­ti­na­tion in the EU and the cost of rent­ing a flat in Dublin was markedly cheaper than in Paris, Frank­furt or Lux­em­bourg, said Movinga on its web­site.

Movinga’s in­dex is weighted for a range of other vari­ables, in­clud­ing the num­ber of Miche­lin­starred restau­rants and Burberry shops to the cost of an evening cock­tail.

“Ev­ery­one is talk­ing about cities like Paris and Frank­furt pre­par­ing for an in­flux of banking in­dus­try work­ers due to Brexit,” said Movinga man­ag­ing di­rec­tor Finn Hänsel. “But other cities like Dublin, Val­letta, Lux­em­bourg and Amsterdam may be bet­ter equipped to make these work­ers feel happy and at home.” Agen­cies


The Euro­pean Cen­tral Bank says it has had many in­quiries from Bri­tish-based banks want­ing to come un­der its watch, prompt­ing it to look at fast-track­ing li­cence ap­pli­ca­tions.

Newspapers in English

Newspapers from Malaysia

© PressReader. All rights reserved.