Banks are hoping for a ‘miracle’ Brexit deal, EU watchdog warns

Banks are NOT ready for Brexit and are hoping for a ‘miracle’ deal, EU watchdog warns as May struggles to break deadlock with Brussels

  • European watchdog issues warning that banks are not ready for a no deal Brexit
  • Piers Haben said ‘time is running out’ and bankers cannot rely on a ‘miracle’ deal
  • Fears that chaos could ensue if financial system not prepared by next March 

In a statement this morning, EBA director of banking Piers Haben expressed alarm at the pace of preparations

Banks are not ready for Brexit and are still hoping for a ‘miracle’ deal, the EU watchdog warned today.

The European Banking Authority (EBA) said ‘time is running out’ and preparations for the failure of talks between Brussels and the UK were inadequate. 

The ‘wake up call’ for financial institutions came as Theresa May struggles to break the negotiations deadlock.

Mrs May will meet EU council president Donald Tusk in Downing Street later ahead of a crucial summit with leaders this week.

Northern Ireland Secretary Karen Bradley is also heading to Brussels for talks with Michel Barnier, as efforts to find a way through intensify. 

The two sides have in principle agreed a standstill transition deal running from the formal Brexit date next March to the end of 2020. 

However, it will not come into effect unless a divorce package is finalised. The EU is insisting that must include guarantees on keeping a soft Irish border, but there are widely different views on what that entails.

Banks in Britain have been submitting applications for licences to set up or expand operations in the EU, to avoid potential upheaval after March.

UK branches of banks from the EU also need permission to continue serving customers in Britain.

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But in a statement this morning, EBA director of banking Piers Haben expressed alarm at the pace of action.

‘This should be a wake up call. Time is running out, in some cases it has run out, and don’t assume there will be a transition period,’ he said.

‘Big banks can’t assume they can put off the full application process.’

The EBA said banks must have enough staff at new operations to manage risks from the day after Brext, or financial stability would be at risk.

The watchdog – which is itself relocating from London to Paris due to Brexit – voiced concern that institutions might be looking to avoid costs and did not know what exposure they faced.

EU council president Donald Tusk (left) is due to meet Theresa May (pictured right at a fete in Maidenhead yesterday) in Downing Street later

Northern Ireland Secretary Karen Bradley (file picture) is also heading to Brussels for talks with Michel Barnier, as efforts to find a way through intensify

‘There is widespread perception there will be a public policy miracle. I don’t think banks can rely on a general, catch-all public intervention,’ Mr Haben said. 

The Bank of England has said UK and EU legislation is needed to ensure continuity in financial contracts.

But Brussels has shown no willingness to legislate, and the EBA said no public solution may be proposed or even agreed in time.

The EBA said banks should explain to regulators how they will continue to swap data between units in Britain and the EU without falling foul of data protection rules.

EU-based lenders will also have to explain if any bonds they have issued under UK law remain valid after Brexit for plugging capital shortfalls in a crisis. 

Meanwhile, International Monetary Fund chief Christine Lagarde said the EU must be ready for an ‘influx of financial firms’ from the UK after Brexit.

Speaking on a visit to Dublin, she said: ‘In the near-term, it is critical to ensure that regulatory and supervisory capacities are prepared for the influx of financial firms that will move to continental Europe – and Ireland – as a result of Brexit.’ 

Tory Brexit infighting escalates as minister slams Hunt for rebuke to Remainer businesses

Jeremy Hunt told the BBC’s Andrew Marr show yesterday that the interventions by business on Brexit were ‘inappropriate’

Tory Brexit infighting escalated today after ministers openly clashed over business attacks on the government’s strategy.

Guto Bebb blasted Jeremy Hunt and Boris Johnson for ‘inflamatory’ rebukes to firms including Airbus. 

The aerospace giant said last week that it was ready to quit the UK if there is no deal with Brussels. 

Mr Hunt hit back over the weekend, accusing the firm of making ‘completely inappropriate’ threats. Mr Johnson was also reported to have responded ‘f*** business’ when asked about objections at a private meeting.

But Mr Bebb, a defence minister and MP for Aberconwy, was clearly infuriated by the retorts. 

‘The dismissive attitudes shown towards our business community by senior Cabinet ministers is both unworthy and inflammatory,’ he told the BBC’s Sunday Politics Wales programme.

‘Business wants a good deal and so does the Government. Do the leadership aspirations of multi-millionaires trump the need to listen to the employers and employees of this country?

‘It is perhaps understandable that a key part of the economic powerhouse that is north east Wales can be belittled by those with a London centric world view but Andrew aspires to speak for all Wales.’

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