Brexit transition by end of 2020 — European Union negotiator

Michele Moreno
December 21, 2017

"There is no place [for financial services]", the EU's chief Brexit negotiator, Michel Barnier, said on Tuesday (19 December).

She told colleagues it was clear that the Government was seeking "a deal which secures the best possible trading terms with the European Union, enables the United Kingdom to set rules which are right for our situation and facilitates ambitious third-country trade deals", the spokesman said. "All the rules and policies of the European Union must continue to be applied".

Carney told the Treasury Select Committee that it did not make sense to tell banks they must create subsidiaries, causing a "tremendous amount of cost and disruption", only to change the guidance if there is a co-operation agreement in the future.

If foreign banks began leaving, the City's fabric would begin to unravel, industry officials have said.

The Financial Conduct Authority (FCA) also separately announced further moves to help ensure a smooth transition period.

Senior Tory MEP David Campbell Bannerman, a board member of the campaign group Leave Means Leave, said he was encouraged by the reports of the Cabinet meeting.

"There is no place" for giving Britain's financial services full access to the European Union market, he told a number of newspapers, including Britain's The Guardian.

Unlike branches, subsidiaries are required to hold their own shock-absorbing capital, which can not be repatriated in the event of a financial crisis, offering an added layer of protection to their customers.

More than 100 banks operating in London are branches of lenders headquartered elsewhere in the EU.

"There is not a single trade agreement that is open to financial services".

If foreign banks were forced to convert their branches to subsidiaries after Brexit, it is believed that many firms would decide to leave the United Kingdom altogether rather than taking on the additional costs - reported to be in the billions of pounds.

Catherine McGuinness, policy chairman at the City of London Corporation, said: "Allowing European wholesale banks to operate as normal in the United Kingdom after March 2019 is a welcome bit of news to end the year for the City".

EPA The PM has built unity in the last week on the back of her triumph over the Brexit divorce billRelated articles No Cabinet decisions have been made, but discussions were very positive yesterday I gather no decisions were made but it sounds like we are heading in the right direction.

Other reports by Insurance News

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