Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Laggard banks told COVID-19 no excuse to delay beefing up EU Brexit hubs

Stock MarketsAug 26, 2020 07:45AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: London City Airport restarts commercial flights following lockdown

By Huw Jones and Sinead Cruise

LONDON (Reuters) - Banks in the UK are coming under growing pressure from regulators to get their new hubs in the European Union up and running even as COVID-19 and foot-dragging by clients disrupt Brexit relocation plans, banks and regulators say.

Unfettered direct access to the EU for Britian's financial services sector, worth around 26 billion pounds ($34.19 billion)a year, ends on Dec. 31 and few bankers are betting on an extension.

More than 60 banks in London have set up or expanded operations in the bloc, think tank New Financial has calculated but with just four months to go, not all are ready.

"Many institutions in the EU are too small to be viable and are not doing a lot of business yet as clients want to remain connected to deep liquidity in London," said John Liver, a partner at EY, which is advising banks on their Brexit plans.

But he added that regulators were hardening their "encouragement" for banks to move the "centre of gravity" of their euro-denominated business from London and demonstrate the viability of new continental hubs.

Given several near-miss hard Brexits already, some banks have delayed moving people and causing unnecessary disruption for teams and their families, a source at one global bank said.

The unexpected success of remote working during the pandemic has also raised the question of whether as many bankers, traders, risk managers and support staff need to cross the Channel once the transition period ends.

"We are wondering why EU regulators need all those people to be physically on the ground in the EU when they can comply with the rules of EU from anywhere," the banking source said.

"The pandemic has highlighted how political this issue is."


With no possibility of direct EU-wide access from January, banks in Britain will have to rely on a patchy web of bilateral agreements with national regulators.

The European Banking Authority, the bloc's banking watchdog, said it understood the impact of COVID-19 on Brexit plans but hubs still needed to be ready before January.

"The pandemic has created challenges in some of the plans and some adjustments have been agreed, but the overall principles remain the same," said Piers Haben, director of banking markets, innovation and consumers at the European Banking Authority (EBA).

"The mind and management of the bank must be in the single market," he added.

A second international banking source said clients were in no rush because they can switch business between jurisdictions at relatively short notice, but staff dealing with EU clients, either from the office or home, must be based in the bloc from January because that is where they will be authorised and taxed.

With COVID-19 knocking the economy and clients' operations, there are also questions about the financial sense of running a UK and an EU hub.

The new hubs want to know how long European Central Bank supervisors will allow "back-to-back" booking, where banks can record EU trading and service activities centrally in London to avoid duplicating costs, the second banker said.

"Everyone is working on the assumption we are on a path to ending it but not yet; a planned programme rather than a guillotine in January."

A spokeswoman for the European Central Bank said some banks had hit target operating models already or were on track to but others were falling short of expectations.

"The ECB stresses that 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."

($1 = 0.7604 pounds)

Laggard banks told COVID-19 no excuse to delay beefing up EU Brexit hubs

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email