- New report gauges foreign banking sector’s sentiment on Brexit
- Urgent clarity needed on UK’s post-Brexit trading relationship with the EU, the residency rights of EU nationals in the UK, and the prospects for a transitional deal
The Association of Foreign Banks (AFB), in conjunction with global firm Norton Rose Fulbright, has launched a report on the impact of Brexit on the foreign banking sector in the UK.
A wide cross-section of AFB members, including senior executives from some of the world’s leading banks, responded to a survey as part of the joint Brexit report, which focuses on three areas:
- The UK’s post-Brexit relationship with the EU
- The immigration impact on staff
- Business confidence in the UK
The report is further split into three sections to reflect AFB structures:
- UK branches of EU banks
- UK branches of non-EU banks
- UK incorporated subsidiaries of foreign banking groups
Several common themes have emerged. The replacement of the EU passport is of primary concern and some form of mutual market access seems to be the preferred replacement. Clarification on continued EU market access (i.e. the Government’s plans for the UK’s post-Brexit trading relationship with the EU) was also seen as time critical.
A requirement to subsidiarise was a clear ‘red line’ for most branches, with both EU and non- EU branches confirming that a subsidiarisation approach would cause them to reassess their presence in the UK, possibly leading to the closure of the UK branch. A number of non-EU branches believe, however, that any subsidiarisation requirement is more likely to apply only to EU branches.
There is also concern that the relocation of euro-denominated clearing from London may have substantial capital and cost implications. Likewise, the issues of immigration and access to talent feature prominently.
John Treadwell, Chief Executive Officer of the Association of Foreign Banks, commented: “This report provides an insight into the views that different types of foreign banks in the UK have on Brexit. It covers the issues facing the foreign banks, such as the type of post-Brexit trading relationship between the UK and the EU - especially the framework that will replace the widely used EU passport – and the concern that the UK’s post-Brexit immigration system may reduce the available talent pool in the UK, particularly London. However, there has been widespread commitment by the foreign banks to the UK at this stage and many banks believe that Brexit could bring potential opportunities as a result of the UK’s future trade deals with individual countries.”
Jonathan Herbst, Global Head of Financial Services Regulation at Norton Rose Fulbright, commented: “The report highlights the diversity of views amongst foreign banks in the UK in respect of potential post-Brexit challenges and opportunities. However, it is also clear that the clock is ticking and many banks have a strong desire for greater clarity on the UK's future trading relationship with the EU."
For further information please contact:
John Treadwell, CEO, Association of Foreign Banks
Tel: +44 (0)20 7283 8300
Louise Nelson, Senior PR Manager, Norton Rose Fulbright
Tel: +44 (0)20 7444 5086;
Mob: +44 (0)7909 684 893
Notes for editors:
Association of Foreign Banks
The AFB represents the foreign banking sector which provides financial services throughout the UK, mainly in London, through branches, subsidiaries and representative offices. The AFB provides a forum for the sharing of information on industry issues and makes representations to industry, government, regulatory bodies and other financial services organisations.
The foreign banks concerned engage in a wide range of banking and investment business activity in the UK, primarily in the wholesale banking markets, and make a significant contribution to London’s standing as a major global financial centre. Member banks and their affiliated organisations range from the largest with several thousand staff to the smallest with ten or less staff.
Norton Rose Fulbright
Norton Rose Fulbright is a global law firm providing the world’s preeminent corporations and financial institutions with a full business law service. The firm has more than 4,000 lawyers and other legal staff based in Europe, the United States, Canada, Latin America, Asia, Australia, Africa, the Middle East and Central Asia.
Recognized for its industry focus, Norton Rose Fulbright is strong across all the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and healthcare. Through its global risk advisory group, the firm leverages its industry experience with its knowledge of legal, regulatory, compliance and governance issues to provide clients with practical solutions to the legal and regulatory risks facing their businesses.
Norton Rose Fulbright operates in accordance with its global business principles of quality, unity and integrity, aiming to provide the highest possible standard of legal service in each of its offices and to maintain that level of quality at every point of contact.
Norton Rose Fulbright Verein, a Swiss verein, helps coordinate the activities of Norton Rose Fulbright members but does not itself provide legal services to clients. Norton Rose Fulbright has offices in more than 50 cities worldwide, including London, Houston, New York, Toronto, Mexico City, Hong Kong, Sydney and Johannesburg. For more information, see nortonrosefulbright.com/legal-notices.