02 August 2017

Financial Times: ING chief warns over UK access for European banks after Brexit

The chief executive of ING, the Dutch bank, has warned that London would “shoot itself in the foot” if it forced banks based elsewhere in Europe to set up separately capitalised operations in the UK after Brexit.

Ralph Hamers said it would be “very detrimental for the financial industry in London” if regulators blocked banks based in the European Economic Area (EEA) from continuing to operate in the UK through more lightly capitalised branches.

Most attention has focused on how Brexit may stop banks from using London as a base to sell to clients in other EEA countries. But lenders in the rest of Europe are starting to consider whether their access to the UK could also be hampered.

Many of Europe’s largest banks have sizeable operations in the UK, which they operate through a branch structure, allowing them to benefit from a lighter regulatory regime and lower capital requirements in Britain.

This is because banks based in the EEA are free to open operations in other members of the bloc without needing to set up a full subsidiary.

Sam Woods, head of the Bank of England’s Prudential Regulation Authority, warned that this may change for some, especially if they have significant deposits from British consumer and corporate customers.

“The PRA will expect those EEA bank branches which have significant retail/SME transactional deposits to discuss with it whether they need to establish a subsidiary, if they plan to continue that activity in the UK after its withdrawal from the EU,” said Mr Woods in a letter to bank bosses in April.

Full article on Financial Times (subscription required)

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