European banks are looking to expose loopholes and differences in national rules to get lesser regulations or avoid European Central Bank rules altogether, specifically after Britain quits the European Union, two ECB regulators advised on Friday.
Sabine Lautenschlaeger and Daniele Nouy renewed their calls for closing gaps in European rules that positioned investment firms and bank branches outside the ECB’s banking supervision.
”In the wake of Brexit, many banks will decide to relocate from the United Kingdom to the euro area,“ Lautenschlaeger, who signifies the ECB’s supervisory arm on the executive board, stated at the Eurofi symposium in Tallin. ”And they might choose to set up third-country branches. At the same time, investment firms might also relocate.
“So I think it would make sense to regulate and supervise them at European level.”
Less than 10 of 40 banks that do business in the EU from London have applied for an ECB license to continue operating in the bloc after Britain leaves the Euro. Others are watching to set up market units that are supervised by national authorities in its place.
Speaking earlier in Helsinki, Nouy, the chairwoman of the ECB’s supervisory arm, had reported banks may be adjusting operations to countries with lesser regulation or moving activities into the also known as shadow banking sector.
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“This is not a movie where a rogue hero happily flouts all the rules to save the world,” Nouy stated. “This is about the stability of the banking sector, the prosperity of the economy and the wealth of society as a whole.”