Brexit banks fleeing London must commit to EU: ECB

Banks moving from London to European Union financial centres as Britain quits the bloc will not be given an easy ride by regulators.

Published: 22nd March 2017 05:50 PM  |   Last Updated: 22nd March 2017 05:50 PM   |  A+A-

By AFP

FRANKFURT: Banks moving from London to European Union financial centres as Britain quits the bloc will not be given an easy ride by regulators, the European Central Bank's top supervisor warned Wednesday.

"We obviously don't care whether UK banks move to Frankfurt, Dublin, Paris or some other location in the euro area. What we care about are safe and sound banks," ECB board member Sabine Lautenschlaeger said in a Frankfurt speech.

"We will therefore resist any supervisory or regulatory race to the bottom."

Big banks have been sounding out regulators in different EU nations as they look for a new base to do business in Europe once Britain leaves.

If it goes ahead with a so-called "hard Brexit", the UK will leave the European single market, meaning banks based there will lose the "passports" that allow them to do business from London with clients across the remaining 27 members of the bloc.

To continue operating in Europe, many financial firms will have to set up new business units in EU countries -- although many global banks already have some operations in cities like Paris and Frankfurt.

"Any bank that moves to the euro area will have to meet our standards," Lautenschlaeger said, including "adequate local risk management, sufficient local staff and operational independence".

"We will not accept empty shell companies" run by remote control from London, she insisted.

But the ECB -- which took over as the eurozone's top banking regulator in 2014 -- would be "accommodating regarding the timing" as banks adapt to its supervisory regime, Lautenschlaeger said.

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