No Brexit leeway for British banks
Dozens of finance institutions have already set up new EU basesEuropost
European Union regulators are refusing to give British-based banks any more time ahead of Brexit, despite an extension to the process which some have taken as an opportunity to drag their feet, news wires reported. With the ongoing uncertainty over how and when Britain will leave the EU, cost-conscious banks are reluctant to spend millions more and cause further disruption to already unsettled staff.
Banks are trying to minimise staff moves despite pressure from the ECB, which is granting licenses to firms in order to beef up their EU units with more employees and assets over the next one to two years. This requirement has not changed, even though the EU has given Britain until 31 October to leave, a source close to the matter said cited by Reuters. “Businesses are trying to be savvy, to meet the minimum legal requirement and figure the rest out after Brexit,” the source pointed out.
Dozens of banks have already set up new bases in the EU to avoid disrupting services to clients. Regulators issued licenses for them, even though they are thinly staffed, so that they could be operational when Britain was meant to quit the EU. HSBC, for example, shifted some staff from London to its Paris subsidiary in case of a no-deal Brexit on 12 April, only to recall them when a new delay was agreed.
And a source at a major US bank said it had dozens of staff lined up to move if there was a no-deal Brexit, but stood them down and is now awaiting clarity before any further moves. “We are inclined to say that while we remain in this holding pattern, we don't have to move anyone or anything,” the source said, adding that Brexit could yet be scrapped completely.
The Bank of England expects about 4,000 banking and insurance jobs will have moved from London to new EU hubs by Brexit Day, but recruiters and banking sources say the number that have moved so far is much lower than that. Some banks were behind with plans to be operationally ready and are now using the delay to complete moves of customer accounts to new hubs, a senior official at a global bank said.
Meanwhile, Britain's Financial Conduct Authority's has warned financial firms sending staff to new EU hubs to ensure they still have “appropriate senior oversight” of their operations left behind in Britain. Banks have so far moved around a trillion euros in stocks, bonds, derivatives contracts and other assets from London to their new EU hubs. Accounts of EU clients must also be moved to conduct business from these hubs, a process known as repapering. EU regulators are giving temporary concessions to banks to obtain a license, such as continuing to book some trades in London, but their tolerance is waning.