The Bank of England is to unveil plans allowing European banks to operate in the UK as normal post-Brexit.
It has been discovered that banks offering wholesale finance – money and services gave to businesses and each other – would work under existing rules.
It would apply even in a “no deal” scenario, the Bank is expected to announce later on Wednesday.
It means EU banks working through branches can proceed without making subsidiaries – an expensive process.
The contrast amongst branches and subsidiaries is something every one of us may have wanted to think not to think about ever yet it is significant – so please hold on for me.
Branches offer an easy path for banks to move money around their international operations, however present the risk that in case of a budgetary crisis, funds are immediately repatriated to the foreign bank’s headquarters – leaving customers of the UK branch out of pocket.
Subsidiaries are compelled to hold their own shock-absorbing capital which can’t come and go – they essentially progress toward becoming UK companies.
Transforming from a branch to a subsidiary could cost billions for a bank like Deutsche Bank, for instance, which employs 9,000 individuals in the UK.
As of now, banks based anyplace in the EU can sell services to anyplace else in the EU thanks to an instrument known a budgetary services passport.
Source: BBC
