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Financial News: ECB Says Entry Process For UK Banks Moving

ECB Says Entry Process For UK Banks Moving To Europe May Be Expedited

03/22/2017 - 09:37:00 (RTTNews)

(RTTNews) - Britain-based banks that want to shift to anywhere in Europe may get an expedited entry, though with conditions attached, and there will not be any relaxation of standards, European Central Bank Executive Board member and Vice-Chair for Banking Supervision Sabine Lautenschlager said Wednesday.

In the event of a "hard" Brexit, the UK will become a "third country" for the European Union, which means the British banks would lose their European passport and access to the Single Market, Lautenschlager said.

Many of the 40 UK banking groups would have to apply for a banking license in an EU country to regain the passport, which are granted by the ECB. Applying for a banking license in the EU is a lengthy process.

"We are aware that it is a burden for UK banks to apply for a new licence in the EU," Lautenschlager noted.

"With a view to internal models, we would aim to be accommodating regarding the timing."

She said there will be a transitional period in which new euro area entities might use internal models that have not yet been approved by the ECB.

However, the easier entry would be on the basis that the relevant internal models must have been approved by the UK's Prudential Regulation Authority. And the banks must have sought internal model approval in the euro area.

"The transitional period will cease as soon as we have approved or rejected the bank's model application," Lautenschlager said.

Regarding standards, she said any bank that moves to the euro area will have to meet ECB standards and any empty shell companies will not be accepted.

"We will therefore resist any supervisory or regulatory race to the bottom," the policymaker said.

"All entities in the euro area must have adequate local risk management, sufficient local staff and operational independence. All that should be self-evident," she added.

The UK Prime Minister Theresa May is set to invoke the Article 50 of the Lisbon Treaty on March 29, thus formally triggering the process of exiting the European Union, which should conclude in two years.

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