Business as usual for EU banks in 'open' London, says Bank of England

The central bank said the UK’s supervisory approach to international banks ‘remains stable and consistent’ following Brexit.
Business as usual for EU banks in 'open' London, says Bank of England

EU banks’ branches in London should see no major change in how they are supervised following Britain’s formal departure from the bloc last month, the Bank of England’s supervisory arm said on Monday.

Britain is keen to maintain the City of London’s attractiveness as a global financial centre after full access to the EU, hitherto its biggest customer, ended last month.

Deutsche Bank, Societe Generale, and other leading EU banks have major operations in London, and BoE Governor Andrew Bailey said last week that Britain should remain open to financial firms from the rest of the world.

“Overall, the Prudential Regulation Authority’s (PRA’s) approach to the supervision of international banks remains stable and consistent following the UK’s withdrawal from the EU,” the BoE said in a statement on Monday.

“Those firms which have operated in the UK for some time as either branches or subsidiaries should find the proposals to be in line with their experience of the PRA’s supervision.”

The BoE published a consultation paper updating how it plans to supervise international banks in London, which is home to 150 branches and 90 subsidiaries of banking groups from around the world.

Many banks in London have opened new hubs in the bloc to avoid being cut off from the EU.

“The shift has corresponded to a proportion of the revenues and assets of UK-based investment banks moving to their EU entities,” the BoE said.

The BoE said it wants to make sure that foreign banks in London have adequate safeguards and controls on how they book stock, bond, and derivatives transactions.

“The PRA remains open to highly integrated global booking arrangements, provided that they are effectively controlled and the PRA has sufficient visibility of the group risks,” the BoE said.

There are 66 banks from the EU seeking permission to operate as a branch in Britain, leading to a significant increase in the proportion of UK banking assets that will be represented by branches, the BoE said.

(Reporting by Huw Jones; editing by Susan Fenton)