The European Central Bank (ECB) is concerned about the prospect of international banks based in London relying upon “shell companies” to continue, to operate in the EU post-Brexit, whilst continuing to deliver key services in London. According to a source close to the ECB, Danièle Nouy, the Chair of the Supervisory Board of the European Central Bank, the institution overseen by the ECB, has made known her post-Brexit fears. She was speaking to finance ministers in the eurozone during a meeting in Brussels.
Whilst it is assumed that the United Kingdom will have left the EU by the end of March 2019, London is attempting to maintain its dominance in the City as the inevitable financial centre, much to the discontent of its European competitors, such as Frankfurt and Paris.
If the United Kingdom decides to go down the road of a so-called “hard” Brexit, banks based in London would lose “their financial passport”, which enables them to offer their services from London to the customers in the so-called “EU27”.
To continue to operate within the Union, financial establishments will have to set up a new head office in an EU country. A number of banks have already indicated the plans which they are making to move jobs to other European financial centres, in particular Frankfurt but also Paris and Dublin.
Last Wednesday, a senior official in the Bank of England (BoE) warned that around 10,000 jobs in banking and insurance may be relocated from the United Kingdom to elsewhere in the EU immediately post-Brexit.