09 September 2020

FT ECB supervisors turn the screw on banks’ Brexit plans

Ending up with overlapping operations in London and the eurozone is the last thing cost-cutting lenders want. Europe’s top financial supervisor is fed up with waiting for big banks to prepare for Brexit.

This is the message European Central Bank officials have given to banking executives this summer, while asking them for “action plans” to make their EU offshoots “operationally self-standing in key areas” by the end of this year when the Brexit transition period ends.

But the move by the ECB to turn the screw on lenders over their Brexit plans has produced loud complaints. Some bankers privately suspect this is a politically motivated way of putting pressure on the UK as trade talks with the EU enter a crucial stage.

While the largest banks have been working on these issues since the UK voted to leave the EU in June 2016, the ECB is still not convinced they have shifted enough people, assets and resources from London to their eurozone offshoots to make them ready for the post-Brexit world.

“Some banks have substantially reached their target operating model already or are well on track towards that target,” the ECB said in a statement to the FT. But it added: “There are other banks that still need to make progress, both in terms of relocating assets and staff. Our joint supervisory teams have engaged with these banks to make sure there is a shared understanding of the path towards the target operating model.”

The central bank also stressed “this is not about moving assets and staff alone. It is also about aiming to be structurally profitable, being operationally self-standing in key areas and most importantly not excessively reliant on back-to-back booking to the parent”....

more at FT

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