LONDON (Reuters) - Credit rating agency DBRS is to open a new office in Germany’s financial capital Frankfurt and transfer some staff from London to ensure it can keep operating in the European Union after Brexit.
The new base is required to maintain an EU license, which DBRS needs to sell its services in Europe and remain one of the European Central Bank’s four recognized rating firms.
The firm’s European head, Detlef Scholz, told Reuters just months after the 2016 Brexit vote that DBRS was likely to need an EU office, but maintained on Tuesday that there would be no mass shift from London where it currently employs around 100 staff.
“Our London office has a very international and diverse workforce so it will be attractive for some to relocate,” Scholz said.
“These are discussions that will need to be had around the kitchen table. ... But I’m confident several people will transfer, and we will then supplement those with local hires,” he said.
The Brexit problem is bigger for Canada’s DBRS because all of its European analysts are currently based in London, whereas the big three of S&P, Moody’s and Fitch already have sizable offices in cities such as Frankfurt, Paris and Madrid.
Pressure has also been cranked up by the Paris-based industry regulator, the European Securities and Markets Authority (ESMA), which only last month ordered agencies to ensure their Brexit plans were in place by the end of the year.
ESMA wants to ensure that there are no last minute headaches for an industry that quality-checks trillions of euros and pounds worth of financial assets ranging from government bonds to complex securitized loans.
Scholz said upheaval will hopefully be kept to a minimum following Monday’s outline agreement between Britain and the EU on a near two-year Brexit transition deal.
“The UK could implement a (regulatory) regime that mirrors the European rules, that is my anticipation,” he said. “I think it is reasonable to expect that the starting point of the future UK law is the existing EU law.”
However, ESMA has said rating firms would need have to “sufficient presence” in terms of both analysts and senior management and compliance departments in a remaining EU country when Brexit takes place.
Reporting by Marc Jones; Editing by Leslie Adler