European banks will operate as normal post-Brexit says BoE

The Bank of England has confirmed that European banks will be allowed to operate under existing rules after Brexit, easing the burden for the financial services industry which has urged negotiators to strike a cross-border deal.
By The Newsroom
Published 20th Dec 2017, 18:43 BST
Updated 20th Dec 2017, 18:46 BST
The Bank of EnglandThe Bank of England
The Bank of England

It means European banks will not need to convert their branches in the UK into subsidiaries - a move which would have created additional financial burdens on those institutions.

The central bank said it made the decision on the assumption that a “high degree of supervisory cooperation with the EU” would continue after the UK leaves the bloc.

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Subsidiaries in the UK stand as separate legal entities and are required to hold large capital reserves in case of a market crash, which is meant to stop them from pulling out in such an event and taking customers’ funds with them. Those capital requirements do not apply to branches.

“Keeping the UK’s financial system open to foreign institutions is in the best interests of the UK, EU and global economies,” the Bank said.

“The UK’s financial sector also brings substantial benefits to EU households and firms, allowing them to access a broad range of services efficiently and reliably.”

There are currently 160 international bank branches operating in the UK, 77 from the European Economic Area.