Anthony Browne, chief executive of the British Bankers Association, opening the organisation’s annual International Banking Conference in London on October 20, stressed banks’ need for as much clarity as possible about the UK Government’s Brexit negotiations and the likely relationship between the country and the neighbouring bloc so that they can “plan for the future with confidence”.
The crucial point, Browne said, was to “retain Europe’s integrated financial market, not split it in two by building a wall along the channel”.
He said: ”The only way to ensure that [outcome] is for banks based in the UK to retain full access to the single market in financial services and for European banks based in Europe to retain full access to the UK’s global financial centre and customers based here. In other words, we need to retain some version of passporting.
Browne added: “The alternatives, such as [regulatory] equivalence, are poor shadows of genuine passporting. They only allow a much narrower range of services, provide much more limited rights at greater cost and can be withdrawn at short notice.”
With other financial centres lobbying to draw banking business away from the City, Browne warned that “London’s position as Europe’s financial capital should not be taken for granted”. And with any deal between the UK and EU likely to take years to ratify, the risk of a “cliff edge” effect of banks losing passporting rights overnight is high without an orderly transition period.
Without the necessary clarity over how events will play out, banks are preparing for the worst case scenario, with project teams analysing which businesses could be moved elsewhere in the world and when, Browne said, “it can take years to move a business. They cannot wait until the end of Article 50 negotiations in 2019, they have to start taking action sooner“.
The BBA chief warned: “With the first moves expected in the coming months, there is no room for complacency.”