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Banks using Britain as a gateway to the EU have unrestricted access under transition agreements which end on December 31. But they must implement plans to serve customers in the bloc before the arrangement ceases, the European Banking Authority said on Wednesday.
Major banks have opened centres in the EU, such as in Frankfurt, to continue serving customers – but the watchdog has told them to move faster and fully execute Brexit plans.
Financial firms in London, including Dutch multinational ING, have started moving staff members home after Britain left the EU in January.
The EBA has warned banks must follow through with the “complete execution” of Brexit plans, according to their new licenses.
The authority said: “In particular, financial institutions should ensure that associated management capacity, which includes the appropriate technical risk management features, is effectively active before the deadline.
“Despite significant action by many financial institutions, there is no room for complacency even for those institutions that have already obtained all necessary authorisations and permissions.
“Institutions should also assess and take necessary actions to address any impacts on rights and obligations of their existing contracts, in particular derivative contracts.”
They added this should be “commensurate with the size, scale and complexity of their activities”.
New centres will increase their presence in the EU in alignment with work undertaken with customers in the area.
The EBA also acknowledged ‘capital impacts’, with Britain yet to announce whether or not banks in London will have to hold more capital against eurozone debt after transition ends.
The European Union’s Brexit negotiator Michel Barnier is confident that a new trade deal with Britain was possible, Reuters revealed on Friday.
His behind-closed-doors comments followed the latest round of EU-UK negotiations, and contrast with his downbeat public assessment that London’s rigid positions on fisheries and the “level playing field” guarantees of fair competition meant a deal was unlikely for now.
Positive talks on issues ranging from trade to security from 2021 onwards come more than four years after the EU referendum.
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The EU says a deal needs to be done by October to allow time for ratification by the end of the year. Both sides have said the talks may be stalling.
According to sources present, Mr Barnier told a private meeting: “I remain confident that a balanced and sustainable deal remains possible, even if less ambitious.”
He added that London seemed more interested in pursuing only a “low-quality, low-profile” deal.
He said his recent encounter with Boris Johnson had left him with the sense that the British prime minister did want a deal, despite insisting that London was prepared for the prospect that there might be no agreement at all.
Additional Reporting by Maria Ortega
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