EASIER E.U. RELOCATION FOR LONDON BANKS
ECB hopes to minimise financial services disruptions by easing lengthy entry test
FRANKFURT
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