Wednesday 22 May 2019

EU sticks to deadline for UK banks to up Brexit staff

Brexit rules: the ECB, which has its headquarters in Frankfurt, is putting pressure on UK banks to meet its requirements. Photographer: Alex Kraus/Bloomberg
Brexit rules: the ECB, which has its headquarters in Frankfurt, is putting pressure on UK banks to meet its requirements. Photographer: Alex Kraus/Bloomberg

Huw Jones, Sinead Cruise, and Francesco Canepa

European Union regulators are refusing to cut British-based banks any slack over bulking up in the bloc in preparation for Brexit, despite an extension to the process which some have taken as an opportunity to drag their feet.

Cost-conscious banks are reluctant to spend millions more and cause further disruption to already unsettled staff given uncertainty over how and when Britain will leave the EU.

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"Businesses are trying to be savvy, to meet the minimum legal requirement and figure the rest out after Brexit," Hakan Enver, managing director for financial services at recruiter Morgan McKinley told Reuters.

Banks are trying to minimise staff moves despite pressure from the European Central Bank (ECB), which set a proviso to granting licences that firms would beef up their EU units with more employees and assets over the next one to two years.

This requirement has not changed, a source close to the matter said, even though the EU has given Britain until October 31 to leave, an extension from the original 'Brexit Day' of March 29.

"Banks are still expected to stick to the timeline agreed with the ECB," the source said.

Dozens of banks have already set up new bases in the EU to avoid disrupting services to clients.

Regulators issued licences for them, even though they are thinly staffed, so that they could be operational when Britain was meant to quit the EU.

HSBC, which declined to comment, shifted some staff from London to its Paris subsidiary in case of a no-deal Brexit on April 12, only to recall them when a new delay was agreed.

And a source at a major US bank said it had dozens of staff lined up to move if there was a no-deal Brexit, but stood them down and is now awaiting clarity before any further moves.

"We are inclined to say that while we remain in this holding pattern, we don't have to move anyone or anything," the source said, adding that Brexit could yet be scrapped completely.

The Bank of England expects about 4,000 banking and insurance jobs will have moved from London to new EU hubs by Brexit Day, but recruiters and banking sources say the number that have moved so far is much lower than that.

Meanwhile, Britain's Financial Conduct Authority's has warned financial firms sending staff to new EU hubs to ensure they still have "appropriate senior oversight" of their operations left behind in Britain.

Reuters

Irish Independent

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