Up to now, London has been the financial centre of the EU. But, the Brexit agreement has yet to be approved by all parties, and financial authorities are now preparing for the prospect of the UK leaving the union without a deal. This means that the EU may need to restructure its financial industry. Despite this uncertainty, however, financial institutions are still seeing Brexit as an opportunity.
Last week François Villeroy de Galhau, the chairman of the Banque de France pointed out that “In a context that remains uncertain, we have to prepare for this situation. “Brexit may also be an opportunity to restructure the European financial system,” said the French banker enthusiastically.
He added: There won’t be a single ‘City’ for the continent, but rather a polycentric network of integrated financial centres. After Brexit, there will be several financial hubs, as is the case in the United States with New York, Chicago and Boston. Paris has everything it needs to become a market hub. There are major banks and a pool of highly qualified employees.”
Initially, it was believed that Frankfurt, which is the economic capital of Germany, was considered to be next in the running to take over from London post-Brexit. Now, other European cities have had a lot of interest as well. For example, HSBC have expressed interest in establishing their new European base in Paris.
According to Managing Director at the Autorité des Marchés Financiers (AMF) Xavier Parain, the environment for financial institutions in is “quite exceptional in Europe”. Despite this, there have been concerns raised over the fact that “the large actors are well prepared for Brexit. The small ones aren’t. A number of institutions are doing it at the last minute.”
In the case of a no-deal Brexit, british companies will be required to go through the ACPR process, as they will lose their European access. ACPR vice president, Bernard Delas, noted; “There are still around 50 cases being treated, it’s very late. We are striving to be ready for late March. The only real response to this problem is transferring portfolios to a French entity but we absolutely reject regulatory optimisation.”
Please follow and like us: