UK banks seek more help amid Brexit haze
The United Kingdom’s banks have called on the nation’s government to do more to support their post-Brexit future.
Acting collectively as UK Finance, they said in a report published on Monday that London must develop an ambitious strategy to boost the export of financial services after a post-Brexit trade deal with the European Union largely neglected the sector. “The sector is of major importance to the UK economy,” the UK Finance report said.
The Financial Times newspaper said the banks want a flurry of “regulatory diplomacy” to get institutions, including the Bank of England and the Financial Conduct Authority, working with the EU on improving access to the bloc’s markets.
The paper quoted David Postings, chief executive of UK Finance, as saying the UK must “seize the opportunity to be a global champion for free trade in financial services, building on our strengths as the world’s most open and international financial center”.
With the UK no longer part of the EU’s financial regulatory system, the report contends London can also push for more global convergence in financial standards, something that would make it easier for financial companies to operate in other jurisdictions.
UK Finance said London should seek deals that grant access to markets in Japan and the United States.
Reuters noted that UK Finance also wants less red tape, in areas including reporting requirements.
The Financial Times said the UK’s financial sector felt left out of the trade deal secured with the EU late last year. It has since struggled with Brussels’ refusal to recognize UK stock exchanges and trading venues, which has led to Amsterdam passing London as Europe’s largest share-trading center.
Equivalence of rules
London and Brussels are talking about the EU recognizing the UK’s so-called equivalence of rules, which would allow London to continue to provide financial services within the bloc, something that is expected to take some time.
UK Finance said, despite the difficulties, the UK remains the world’s top net exporter of financial services, with a trade surplus in 2019 of 60.3 billion pounds ($84.5 billion) and more than 1 million jobs.
Financial news agency Bloomberg added that, despite some UK companies relocating to the EU in search of frictionless trading, others are heading in the opposite direction.
Quoting the company Bovill, which obtained information from the Financial Conduct Authority, Bloomberg said around 1,000 of the EU’s 1,500 money managers, payment companies, and insurers have applied for regulatory permission to operate in the UK.
“(Companies) were operating on a services passport prior to Brexit, which means they did not have a permanent office in the UK. These firms are therefore likely to invest in real estate and professional services advice as they set up a UK office for the first time,” said Ed O’Bree, a partner at Bovill.