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[...]The London-based bank, which focuses most of its business on the UK, is the only British high street lender without a subsidiary in another EU country.
Lloyds is now drawing up plans to ensure that it can maintain its relatively small number of German and Dutch retail clients and keep access to the European payment system. [...]
Meanwhile, the Lloyd’s of London insurance market last week became the first major financial services firm to outline a timetable for moving some of its operations to the EU in preparation for Brexit.
The most likely option for Lloyds Banking Group is to convert one of the two EU branches it has in Frankfurt and Amsterdam into a subsidiary, according to a person briefed on its plans. That would require the bank to allocate more capital and a small number of staff. [...]
It plans to keep its German and Dutch clients alongside the rest of its retail activities within the new structure that it is being forced to create under the UK’s ringfencing law. This requires banks with more than £25bn of deposits to hive off their consumer-facing business from riskier investment banking activities by 2019.
However, if the UK leaves the European Economic Area, banks fear that it may trigger a change in the law to prevent EEA clients from being included inside the ringfence, forcing the new structures to be unwound and reassembled.
Executives at several banks warned that this would be costly and time-consuming for them and disruptive for clients that have to move, and they may prefer to sell the assets rather than attempt to transfer them.
Other banks have already altered their ringfencing plans following the Brexit vote.
The Financial Times revealed last month that Banco Santander was set to abandon plans to split its UK operations in order to potentially shift parts of the business out of the UK more easily if necessary.
The bank is likely to put as much of its UK business as possible into its ringfenced division while moving the small remaining rump of its business into the London-based branch of its Spanish parent group.
Full article on Financial Times (subscription required)