In a statement this morning, EBA director of banking Piers Haben expressed alarm at the pace of preparations
Banks are not ready for Brexit and are still hoping for a ‘miracle’ deal, the EU watchdog warned today.
The European Banking Authority (EBA) said ‘time is running out’ and preparations for the failure of talks between Brussels and the UK were inadequate.
The ‘wake up call’ for financial institutions came as Theresa May struggles to break the negotiations deadlock.
Mrs May will meet EU council president Donald Tusk in Downing Street later ahead of a crucial summit with leaders this week.
Northern Ireland Secretary Karen Bradley is also heading to Brussels for talks with Michel Barnier, as efforts to find a way through intensify.
The two sides have in principle agreed a standstill transition deal running from the formal Brexit date next March to the end of 2020.
However, it will not come into effect unless a divorce package is finalised. The EU is insisting that must include guarantees on keeping a soft Irish border, but there are widely different views on what that entails.
Banks in Britain have been submitting applications for licences to set up or expand operations in the EU, to avoid potential upheaval after March.
UK branches of banks from the EU also need permission to continue serving customers in Britain.
But in a statement this morning, EBA director of banking Piers Haben expressed alarm at the pace of action.
‘This should be a wake up call. Time is running out, in some cases it has run out, and don’t assume there will be a transition period,’ he said.
‘Big banks can’t assume they can put off the full application process.’
The EBA said banks must have enough staff at new operations to manage risks from the day after Brext, or financial stability would be at risk.
The watchdog – which is itself relocating from London to Paris due to Brexit – voiced concern that institutions might be looking to avoid costs and did not know what exposure they faced.
EU council president Donald Tusk (left) is due to meet Theresa May (pictured right at a fete in Maidenhead yesterday) in Downing Street later
Northern Ireland Secretary Karen Bradley (file picture) is also heading to Brussels for talks with Michel Barnier, as efforts to find a way through intensify
‘There is widespread perception there will be a public policy miracle. I don’t think banks can rely on a general, catch-all public intervention,’ Mr Haben said.
The Bank of England has said UK and EU legislation is needed to ensure continuity in financial contracts.
But Brussels has shown no willingness to legislate, and the EBA said no public solution may be proposed or even agreed in time.
The EBA said banks should explain to regulators how they will continue to swap data between units in Britain and the EU without falling foul of data protection rules.
EU-based lenders will also have to explain if any bonds they have issued under UK law remain valid after Brexit for plugging capital shortfalls in a crisis.
Meanwhile, International Monetary Fund chief Christine Lagarde said the EU must be ready for an ‘influx of financial firms’ from the UK after Brexit.
Speaking on a visit to Dublin, she said: ‘In the near-term, it is critical to ensure that regulatory and supervisory capacities are prepared for the influx of financial firms that will move to continental Europe – and Ireland – as a result of Brexit.’
In other developments today, Sir John Major returned to Downing Street for a reception with the Queen’s Young Leaders group
Sir John was welcomed back to No 10 by officials for his latest function at the office he officially departed more than 20 years ago