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Global investment banks are expected to move hundreds of billions of dollars more in assets and risk transfers to the euro area at the urging of the European Central Bank.
Citigroup Inc. officials are set to receive feedback on their plans from the ECB on Thursday, as other firms also prepare to hear the regulator’s thoughts, said the people, who asked to remain anonymous as the discussions are private. Citigroup and its US rivals are among those getting ready to shift more assets, risk management capabilities, and staff as a consequence of the watchdog’s findings in a “desk mapping” review last year, according to the people.
Spokespeople for Citigroup and the ECB declined to comment.
Almost seven years after the UK voted to leave the European Union, banks are still negotiating with regulators over the structure of their business in the bloc. While many investment banks have been reluctant to shift away from London given its deep liquidity and talent pools, the ECB wants to have oversight of financial risks for the EU that are embedded in the balance sheets of global banks.
“There are still discussions about the amount of assets that need to be transferred. We expect about €200 billion to €250 billion for Frankfurt and well over €300 billion in total,” said Hubertus Vaeth, managing director of Frankfurt Main Finance, a lobby group.
In 2018, banks agreed with the ECB to move about €1.2 trillion ($1.3 trillion) of assets to the euro area from the UK over several years. That process is largely complete, Andrea Enria, the ECB’s top oversight official, said earlier this year.
Banks moved over €1 trillion of assets to retain access to EU clients
Source: ECB
Still, the ECB initiated a desk-mapping review in 2020, covering mostly US lenders but also firms in the UK and Switzerland, to ensure that European risks are managed locally. The watchdog said last year that 21% of 264 trading desks at seven banks “warranted targeted supervisory action” and gave the lenders time to come up with plans to address its findings....
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