The European Banking Authority on Oct. 12 published an opinion aimed at providing guidance to firms and authorities in relation to Brexit relocations, outlining key principles for guidance in a number of areas it deemed relevant, including authorizations, the prudential regulation and supervision of investment firms, and resolution.

Among the key principles it laid out, the EBA warned against lowering existing authorization standards for institutions seeking to relocate to within the EU in light of the U.K.'s exit from the bloc, and cautioned firms against setting up "empty shell" companies. Institutions wishing to relocate from the U.K. to the remaining EU countries should include in their applications a clear explanation of the objective factors supporting the choice of jurisdiction, according to the statement.

In addition, the EBA urged the European Commission to consider revising legislation regarding the current system of assessing access for overseas investment firms, which it described as "suboptimal." The EBA also recommended extending the European Central Bank's authority, arguing that systemic investment firms established in the eurozone should be subject to the supervision of the ECB.

With regard to resolution, the EBA noted the potential for Brexit to impact ongoing resolution reforms and stressed the need for institutions and authorities to assess the implications of the U.K.'s departure for the build-up of the minimum requirement for own funds and eligible liabilities, or MREL, and take the necessary steps now to mitigate relevant risks.