British-based banks seeking to relocate some operations to the EU before Britain quits the single market are behind schedule in their preparations for the move, a European Central Bank (ECB) supervisor has warned.
International banks based in London risk losing access to the EU’s single market once Britain leaves it in 2019, forcing many to consider moving parts of their businesses to the bloc and seek a licence from the ECB.
Banks are not as far advanced as we would like them to beSabine Lautenschlaeger
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Sabine Lautenschlaeger, who represents the ECB’s supervisory arm on the central bank’s board, said that progress had been slower than hoped.
“Frankly, the banks are not as far advanced as we would like them to be,” Lautenschlaeger said.
“Of the banks that have indicated an interest in relocating operations to the euro area, a number of the larger banks have made progress in their planning. But we have not seen many final decisions yet.”
Lautenschlaeger added that the ECB would not grant licences to “empty shells” and would take a tough stance on “back-to-back transactions”, where a bank would conduct trades out of its EU base but process and risk manage them at its London office.
“While we do not rule out this practice per se, ultimately we expect banks to manage relevant parts of their risks locally and independently,” Lautenschlaeger said.
She also said she expected banks moving to the EU to update their recovery plans, which kick in if they fail, quickly after moving to an EU site.
The top-level intervention follows a flurry of relocation announcements from major UK-based banks and insurers in recent months, with many revealing the site of their new EU headquarters.
Deutsche Bank last month warned UK staff that roles may be shifted as it was likely to book the “vast majority” of its asset out of Frankfurt after Brexit, while Bank of America said it had chosen Dublin as its new European hub but stopped short of unveiling staffing plans.
Goldman Sachs has indicated it would at least double the size of its Frankfurt employee base to 400, as US peer Citigroup said it would create approximately 150 new roles across its EU offices.
Most recently, Royal Bank of Scotland boss Ross McEwan revealed that the still majority-taxpayer owned bank would employ 150 staff in Amsterdam as part of Brexit contingency plans. The staff would be focused on NatWest Markets, RBS’s investment bank.