A UK High Court judge has blasted Barclays Bank as it transfers €190bn of assets to its Irish unit in advance of Brexit, criticising the aggressive timetable for the move and the bank's expectation that a judge would "simply wave the scheme through".
The sharp rebuke will likely serve as a strong warning to other financial entities hoping to finalise court-approved schemes before the UK leaves the European Union.
"This was a significant, complex, and in certain legal respects, a novel scheme," Justice Richard Snowden said in a judgment.
He added: "It could not at any point in the design process have been thought that the court would simply wave the scheme through without having time for consideration."
He warned that companies proposing such complex transfer schemes "should not treat the court hearing as a formality".
Barclays is shifting business currently undertaken for many European clients by a UK entity to Ireland, in order to preserve so-called passporting rights that enable the bank to continue offering financial services to clients in other EU member states after Brexit. The Irish arm is now supervised by the European Central Bank.
Barclays is transferring business from two entities to Ireland. It includes business conducted in countries including Germany, France, Spain, Italy, the Netherlands, Portugal and Sweden by a UK division.
The transfer scheme proposed by Barclays to the UK High Court - and which was largely approved - applied to about 5,000 clients.
Because of the large volume of business to be transferred to Ireland, the scheme contained a number of phased dates upon which the transfers would become effective.
In reaching his ruling in relation to the Barclays transfer, Justice Snowden said he wanted to make an observation regarding the timing of the hearing.
"In two well-publicised decisions in October and November last year, I had cause to remark upon the growing tendency of proponents … of transfer schemes or restructuring schemes … to file complex documents late, and to give the appearance of treating the court as a rubber-stamp by assuming that a judgment sanctioning the scheme would be given immediately," he said.
"I made it explicit that this was not appropriate."
He noted that the planned Barclays scheme of transfer had been "in gestation" since June 2017.
The judge added that when the matter came before him last week, he was told that the initial effective date of the scheme was intended to be January 26, so the Spanish branch of one of the Barclays units could be transferred to the Irish division tomorrow.
"This was, in my view, an unrealistic timetable," said the judge, noting that there could have been opposition to the scheme raised at the hearing.
"Applicants and practitioners who have schemes of this complexity must, when arranging timetables, give the court sufficient time to do its job properly," he warned. "They should not treat the court hearing as a formality, and they should not make arrangements for steps to be taken on the basis that the court will necessarily give its decision immediately."