Daily Management Review

UK Election Over, Banks Plan To Push For New EU Access Plan


12/13/2019




UK Election Over, Banks Plan To Push For New EU Access Plan
Following the resounding election victory of the Conservative Party, banks in the United Kingdom are now developing a set of fresh proposals about the manner in which they should be allowed to do business and access customers in the European Union after Brexit. It is likely that the banks, through t his document, would want to try to influence UK-EU trade talks scheduled for next year.
 
Most of the major players of the UK banking industry are preparing to push for demands of continued access to their customers in the EU as they are allowed now after Brexit, prompted by the absolute majority won by UK Prime Minister Boris Johnson and his pledge to take Britain out of the EU on January 31.
 
But according to reports, the plans that the banks are now drawing up are not even close to their initial demands of near-unfettered access to European customers that they had made after the Brexit referendum in June 2016.
 
Instead the banks are pushing for a basic off-the-EU-shelf model for their business which will give them the scope of offering financial advice and sell some products to wholesale clients in the EU while operating from the UK. However such a model will not allow them to serve retail customers unless they move their headquarters to the EU.
The banks would be allowed a degree of access to EU customers, without causing too much opposition in Brussels, by making use of an existing section of the EU Securities Rules MiFID, known as Article 46, the banks plan to argue.
 
"The international banks want the ability to provide key services and advice to EU customers," said Conor Lawlor, director of Brexit, capital markets and wholesale at UK Finance, a banking trade body.
 
This plan "would require the EU to activate mechanisms it already has in place", Lawlor said.
 
Worth about 26 billion pounds ($33 billion) annually, the EU is Britain's biggest financial services export market. This has driven London’s place as the top financial hub of the world.
 
In anticipation of Brexit, new hubs in the EU have already been set up by the major banks.  However, bankers and lawyers say, if such banks could possess a certain degree of access to EU customers while they remain in London, it would reduce the amount of capital that would be required to be mandatorily held by their EU outposts.
 
Under Article 46 the EU would be required to declare that Britain's rules on "investment services" are similar enough or "equivalent" to the bloc's own rules for access to be granted.
 
"You have got to allow each side to claim victory. The use of Article 46 is an easy win as it's already in legislation and it's a more realistic approach," said Jonathan Herbst, head of financial services at the Norton Rose Fulbright law firm.
 
(Source:www.businessworld.in)






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