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UK banks looking to move their operations to the Europe after Brexit face a six-month wait before being granted a licence to operate on the continent, the European Central Bank has said.
The ECB is the common supervisor for the eurozone’s largest banks and grants licenses to all lenders that operate under its jurisdiction in the single currency area.
In a “frequently asked questions” update on its website published in response to relocation inquiries, the ECB said an application to operate in the eurozone would take around six months to process. The criteria for approval includes measures such as the correct governance procedures and capital and liquidity levels.
“In any event, a decision must be taken within 12 months of the date of the application”, said the ECB.
UK-based banks wishing to continue their operations after Britain’s likely exit from the EU’s single market will need to apply for relocation licenses if they want to keep selling their services in Europe.
The loss of the City’s prized “passport” that allows it to operate in the single market is expected to affect around 40 British-based banking groups.
In response to requests over possible relocation after the Brexit vote, the ECB will be holding a “technical workshop” to provide information to lenders considering the move on May 4.
“The ECB and the national supervisors see value in having preparatory discussions with banks interested in establishing or increasing their presence within the euro area”, said the central bank.
Senior ECB officials have warned they will not engage in a regulatory “race to the bottom” in order to attract lenders to the eurozone.
Last month Sabine Lautenschläger, an executive board member of the ECB, acknowledged the “burden” facing UK-based banks over applying for an EU license.
“With a view to internal models, we would aim to be accommodating regarding the timing”, said Ms Lautenschläger, who is also the vice chairman of the ECB’s supervisory arm.
“We obviously don’t care whether UK banks move to Frankfurt, Dublin, Paris or some other location in the euro area. What we care about are safe and sound banks” she said.
Image via Bloomberg