European Central Bank orders City to disclose plans to move staff abroad
The European Central Bank has ordered financial institutions to reveal details of their plans to shift staff to the Continent after Brexit, ramping up pressure on banks and brokers to explain how they will operate once Britain leaves the bloc.
In a hardening of its stance on multi-national banks with a big presence in the City of London, the ECB has stepped up warnings that a “brass plate” presence in the EU — where business is routed through a member state but senior managers remain in London — will be insufficient for serving continental customers. After Brexit, London-based banks will lose so-called “passporting” rights, which grant access to the EU.
International lenders with a London hub were given a deadline of the end of June to apply for an EU banking licence, with 20 submitting an application. The ECB is said to be using the application process to demand further details on banks’ Brexit plans.
An investment banking source said this included planning for potential failures, how units on the mainland will be capitalised and the number of employees who will be required to move.
The number of bankers leaving the City in the wake of the Brexit vote has so far been lower than some predicted. However, the ECB’s demands for information reflect concerns over the potential for the UK to crash out of the EU without a deal next March. Such an outcome would be likely to accelerate the pace of City job losses. While the bigger investment banks have already made plans for this, it is believed the ECB is particularly targeting smaller banks and broker-dealers, which may have less developed plans.