16 July 2018

Financial Times: French central bank presses UK fintech companies on Brexit strategy

The French central bank has turned up the pressure on hundreds of British payment providers and digital finance companies that have customers in France by asking them for details of their Brexit contingency plans.

The move — the first time such a request has been made by an EU national regulator — is being seen by British payments companies as the latest salvo by Paris in its campaign to challenge London as the European capital of the fast-growing financial technology sector.

Almost 500 British fintechs received an email last week from the Bank of France entitled “Your intention regarding the continuity of your activity in France post Brexit”. It asked them to fill out an online survey about their plans to cope with the UK’s departure from the EU.

The email from the “passport monitoring” unit of the Bank of France’s Prudential Supervisory and Resolution Authority landed a day before the UK government published a white paper outlining its position on Brexit negotiations with the EU.

British companies that provide payment or e-money services to customers elsewhere in the EU will lose their “passporting” rights to do so after Brexit in March 2019 unless an agreement is reached to extend market access, at least for a “transition” period. Many of them plan to set up a separate EU subsidiary to avoid being barred from those markets.

“The French are the only ones to do this so far,” said Michael Kent, chief executive of UK-based digital payments provider Azimo, one of the companies that received the email. “The timing is interesting. It is a shot across the bow for anyone who is relying on a transition period to give them breathing room on Brexit.”

The survey asks firms to state whether they plan to continue activities in France after Brexit and if so where in the European Economic Area they plan to set up a subsidiary and by when they expect this authorisation to be in place.

The Bank of France declined to comment on the email, which was seen by the Financial Times. But French officials said the email was part of prudent planning for a potential “hard Brexit” and rejected any link to their country’s political efforts to win business from London. [...]

Full article on Financial Times (subscription required)

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