Daily Management Review

BoE Reassures Finance Firms With A Post Brexit ‘Transition Deal’, While The Banks Look For Government Ratification On The Same


03/28/2018


As the date of Brexit draws near, the finance firms operating under “passporting” rules in Britain looks for government backing on BoE reassurance.



BoE assured the “finance companies” who are “operating in Britain” that they will get “more time” for meeting with “a Brexit deadline”. The said move has been made for avoiding what could potentially be a “disorderly shift of people and operations across the continent”.
 
Last week, the E.U and Britain came to an agreement of twenty one months’ “transition period” following the Brexit which will take place in “March 2019”. During the said period companies’ access to the group’s market will remain unchanged. However, some banks informed that they will not count on any such “political deal” without the formal ratification of the governments for deals could “collapse” in case of any “domestic political upheaval in the months before Britain leaves”.
 
Giving a letter to these banks, BoE reassured them to rely on the above mentioned “transition period” for easing their Brexit adjustment. As BoE informs that this way, companies can “plan that they will be able to continue undertaking these activities during the implementation period in much the same way as now”.
 
However, one still needs to wait to find out if the financial watchdogs of Europe would allow the British banks having their business in the “bloc” to use the “transaction deal”. While, the C.E.O of UK Finance, Stephen Jones said:
“Without similar assurances from EU regulators, UK-based firms serving customers in the EU will be forced to continue implementing costly contingency plans”.
 
Various banks including Deutsche Bank of Germany as well as Societe Generale  and BNP Paribas of France are operating in Britain under the “passporting” rules of EU, which is due to expire with the departure of Britain from the bloc.
 
Furthermore, BoE added that the government has made commitments of introducing “legislation”, whereby allowing the firms to carry on their operations in Britain for a “limited period” post official Brexit. While, Reuters added:
“In the unlikely event that the withdrawal deal is not ratified this will provide a back-stop for companies to continue their operations, the BoE said.
“Earlier this month, Britain’s finance minister Philip Hammond said once the transition was agreed regulators should tell companies they can rely upon it”.
 
 
References:
reuters.com







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