Europe gets creative to win banks after Brexit

Wed Feb 1, 2017 10:56am EST
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By Anjuli Davies, Andrew MacAskill and John O'Donnell

LONDON/FRANKFURT (Reuters) - Regulators in European countries competing for post-Brexit banking business are offering London-based banks a range of short-term workarounds to help them relocate, bankers, regulators and lawyers say.

Global banks have warned they might have to move their European bases from Britain if its departure from the European Union means they lose "passporting" rights to operate across the bloc under the supervision of just one member state's regulator.

Brexit negotiations have yet to start and will take years but big centers like Frankfurt and Paris, as well as smaller ones like Dublin, Amsterdam and Luxembourg, are encouraging banks, insurers and fund managers to consider moving to them.

Financial watchdogs have told banks they will need to create more than so-called brass plate operations; they will have to have a certain amount of capital, senior staff on the ground and approved risk models to get a license to operate across the EU.

They are looking at ways to make the transition easier, however by allowing institutions which typically have very complex operations to move fewer jobs and assets over from Britain in the near term.

Proposals outlined to Reuters by people involved in talks between regulators and banks include 'back-to-back' trades, where a deal done on the continent could be processed in London, and licensing certain activities more quickly than usual.

"Various jurisdictions are going to try to make it as attractive as possible to set up there," said Mark Compton, a financial services lawyer at Mayer Brown in London.

"They will try to be as flexible and accommodating where they can. But it will vary from jurisdiction to jurisdiction, the appetite of the regulator and the constraints put on them by central authorities."   Continued...

FILE PHOTO: The Canary Wharf business district is seen reflected in windows at dusk in London, Britain December 11, 2016. REUTERS/Toby Melville/File Photo