Wednesday, 20 December 2017

Bank of England to unveil plans allowing European banks to operate in UK as normal post-Brexit

The Bank of England is to unveil plans allowing European banks to operate in the UK as normal post-Brexit.

The BBC has learned that banks offering wholesale finance - money and services provided to businesses and each other - would operate under existing rules.

It means EU banks operating through branches can continue without creating subsidiaries - an expensive process.

Branches offer an easy way for banks to move money around their international operations.

But they present the risk that, in the event of a financial crisis, funds are quickly repatriated to the foreign bank's headquarters - leaving customers of the UK branch out of pocket.
Subsidiaries are forced to hold their own shock-absorbing capital which can't cut and run - they essentially become UK companies.

Changing from a branch to a subsidiary could cost billions for a bank like Deutsche Bank, for example, which employs 9,000 people in the UK.

Currently, banks based anywhere in the EU can sell services to anywhere else in the EU thanks to an instrument known as a financial services passport.

BBC        News.

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