The Bank of England (BoE) has unveiled plans to allow European wholesale lenders to keep operating as normal in the UK after Brexit.
In a paper published on Wednesday afternoon, the BoE reiterated that the “UK’s financial system is both a national asset and global public good.”
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“Keeping the UK’s financial system open to foreign institutions is in the best interests of the UK, EU and global economies,” it added.
BoE governor Mark Carney told Parliament’s Treasury select committee on Wednesday:
Our approach is … best with a high degree of supervisory co-operation. We would hope it’s reciprocated. If it’s not, there will be consequences.
Wholesale banks operating in London will be able to re-apply for their existing status as either a branch or a subsidiary.
They will still have to fill out a form shifting the status of their current UK branches from “passported” to “authorised,” but the process will be straightforward.
The ones that already operate in the UK through branches can continue to do so without creating subsidiaries, which is an expensive process.
Changing from a branch to a subsidiary could cost billions for a bank like Deutsche Bank, which employs 9,000 people in the UK, according to the BBC.
Miles Celic, head of the lobbying group TheCityUK, said:
Encouraging EU banks to continue to operate in the UK will help preserve financial stability for the UK and the EU and will help defend London’s position as an open global financial centre.
Earlier this week, the EU’s chief Brexit negotiator, Michel Barnier ruled out a free trade deal with Britain which includes financial services unless the UK remains in the single market:
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There is no place [for financial services]. There is not a single trade agreement that is open to financial services. It doesn’t exist
Which banks are likely to be affected?
1. BNP Paribas
BNP Paribas, headquartered in Paris, is the eighth-largest bank in the world by total assets.
Sberbank is a state-owned Russian banking and financial services company headquartered in Moscow
UBS is a Swiss global financial services company co-headquartered in Zürich and Basel.
BBVA is a multinational banking group headquartered in Bilbao, Spain. It is the country’s second-largest bank.
5. Credit Agricole
Credit Agricole is a French network of cooperative and mutual banks comprising the 39 Crédit Agricole Regional Banks
Unicredit is an Italian global banking and financial services company, which spans 50 markets in 17 countries.
7. Credit Suisse
Credit Suisse is a leading financial services company headquartered in Zurich.
8. Société Générale
Société Générale is a French multinational banking and financial services company headquartered in Paris.
9. Deutsche Bank
Deutsche Bank is a German global banking and financial services company, with its headquarters in Frankfurt.
Danske Bank UK (formerly Northern Bank) is a commercial bank in Northern Ireland.
DNB is is Norway’s largest financial services group.
Natixis is a French corporate and investment bank.
It was created in November 2006 when the asset management and investment banking operations of Natexis Banque Populaire (Banque Populaire group) merged with IXIS (Groupe Caisse d’