Left Menu
Development News Edition

EXCLUSIVE-Europe prepares raft of post-Brexit banking reforms

Reuters | Updated: 15-05-2019 21:50 IST | Created: 15-05-2019 21:50 IST
EXCLUSIVE-Europe prepares raft of post-Brexit banking reforms
The European Commission is working on its biggest regulatory push on banking since the 2008 financial crash that could curb Britain's access to the bloc, according to an internal draft document seen by Reuters. In the 12-page strategy document, EU officials outline provisional financial services plans for the bloc's executive body, which sets the legislative agenda, and is due to have new people taking over the top jobs this year for a new five-year term. Officials are pulling together ideas that could become more formal policies later in the year.

The Commission had no comment on Wednesday. The document makes clear that there will be an acceleration of financial regulation, after many years when little has happened following a spate of rule-making after the financial crash.

It suggests a review of banks' capital rules by June 2022 that would extend an extra capital buffer imposed on the world's biggest banks, including Deutsche Bank, to other financial institutions such as settlement houses. The document outlines the possibility of "concentration charges" on banks' holdings of risky government debt, a step global regulators have so far shied away from.

That would be a break with the current situation, where banks do not have to set aside capital to cover holdings of their own government's debt. With Europe in the middle of a money laundering scandal centred on banks, including Danske Bank, the document also suggests a centralised anti-money laundering supervisor and changes to the bloc's rules to prevent such crimes more binding.

It also flags possible rules to guard against cyber crime. AUTONOMY

The list of planned legislative changes will also examine how to make the EU less dependent on Britain and London, the region's preeminent financial centre. "Following the departure of the UK, there will be significant work to manage the relationship between the EU27 and the UK in the field of financial services, which will be a source of risk," the document said.

"What's the right balance between EU and non-EU financial services, in particular in the context of Brexit, in key sectors?" The paper suggests that this question would be addressed amid continued efforts to build a pan-European "capital markets union" (CMU) aimed at making the EU more self-sufficient in core financial services.

"Building the CMU will be even more important as the UK withdraws from the Union," said the document, which referred to the "autonomy" of EU financial infrastructure. The many platforms for listing small companies could be consolidated "along the lines of the Nasdaq model". The document makes the case for a single set of EU listing rules and regulator for companies with a market capitalisation of above 1 billion euros ($1.12 billion).

The document also suggests a European Financial Sector Cyber Security Act and new laws governing crypto currencies. "Cybersecurity could benefit from a more centralised and coordinated approach/framework at EU level," the document said.

New proposals on dealing with failing insurers without public bailouts may be needed. The rules on financial advice and ensuring that investors get the best deal may also need reviewing, the document said. The "political feasibility" of a European investor protection scheme would also be assessed in a sign of how Brussels is seeking to encourage more cross-border retail activity.

Simon Morris, a finance services partner at law firm CMS, said in response: “First, the EU will accelerate financial change, unhindered by the pragmatic and weighty UK presence." He said these changes would work against London as it becomes a third country financial centre.

Morris said as a result it would be harder for Britain to achieve the illusory standard of "equivalence" to achieve post-Brexit market access to the EU as it becomes increasingly unattractive for London's financial centre to equate to a less liberal regime. ($1 = 0.8927 euros) (Reporting by Huw Jones; Editing by John O'Donnell and Jane Merriman)


TRENDING

OPINION / BLOG / INTERVIEW

Rethinking Rural Livelihoods in the Times of COVID-19

The reverse migration caused by COVID 19 pandemic has put an additional burden of about one crore people on Indian villages particularly in the states of Uttar Pradesh, Bihar, Bengal and Odisha. Besides increasing the risk of spreading the ...

‘Discounted Deaths’ and COVID 19: Anthropology of Death and Emotions

Death is a social event rather than the mere cessation of biological functions. As seen by anthropologists, death is not just physical but intensely social, cultural, and political....

Indigenous knowledge of communities a must for maximizing impact of community work

Generally, it has been observed that the majority of the academicians in higher education institutions neglect the wisdom of community people and throw their weight around thinking that they know everything and the community knows nothing. ...

In rebuking FBR, Pakistan’s courts take a stand for public health

The system, if implemented effectively, will allow Pakistans revenue service to combat the illicit trade in tobacco products and potentially add hundreds of millions of dollars to the states budget each year. ...

Videos

Latest News

Kentucky restaurateur killed, police chief fired amid protests

A popular black restaurateur was fatally shot in Kentucky early on Monday as police and National Guard troops fired weapons while dispersing a crowd protesting against police killings of African Americans. The chief of police in Louisville ...

Ravens owner Bisciotti pledges $1M toward social justice reform

Ravens owner Steve Bisciotti on Monday pledged 1 million for social justice reform in Baltimore. The Ravens said a committee of current and former players from the team will decide which programs receive contributions.Bisciotti said he is h...

Mexico president kicks off 'new normal' phase amid pandemic

Amid a pandemic and a brewing tropical storm, Mexico President Andrs Manuel Lpez Obrador kicked off Mexicos return to a new normal Monday with his first road trip in two months as the nation began to gradually ease some virus-inspired restr...

U.S. Justice Dept deploys its police agencies in Washington to quell rioting

The U.S. Justice Department has deployed it law enforcement components to maximize the federal security presence in Washington in a bid to quell violent protests, a department spokeswoman said on Monday.Today, President Trump directed Attor...

Give Feedback