European bankers and financial lobbyists asked the Bank of England to speed up licensing EU banks' British branches to continue operating in the U.K. when it leaves the EU in March 2019, Reuters reported Dec. 11.
At present, lenders headquartered in other EU states have 106 branches in London operating under the bloc's "passporting" rules, the newswire noted, adding that it remains unclear whether they can continue operations post-Brexit.
By 2017-end, Sam Wood, BoE deputy governor, is expected to say whether any or all of these branches must reapply for licenses to operate after Brexit or become subsidiaries, which will entail building up capital buffers and cash locally, according to a Brexit paper from lobby group TheCityUK.
Setting up new fully fledged units can be a costly move for EU-based branches, the Brexit paper noted, adding that a policy change "could have wider cost implications for U.K. and EU27 businesses and customers alike."
The Association for Financial Markets in Europe, or AFME, also said in an unpublished briefing book that licenses applied for by existing EU bank branches should be fast-tracked by the central bank, according to "a person who has seen the note." The group added that the future of such branches could soon be a "cliff edge" given that it typically takes a year to secure a new license from regulators.
Reuters said the U.K. and the EU agreed to commence talks for a two-year transition period post-Brexit, which would make it easier to move staff and businesses from London to other bases, according to bankers. However, regardless of whether a transition deal is reached, AFME said authorities would still need to address some market risks.
TheCityUK also reportedly asked the U.K. to continue allowing the so-called UCITS — EU-regulated mutual funds — to be sold in the country. Most UCITS are run from London despite being listed in Luxembourg and Dublin, the newswire noted.