ECB keeps pressure on banks to prepare for Brexit by Bloomberg

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© Bloomberg. The headquarters of the European Central Bank (ECB), left, stand near the skyscrapers on the roofs of the financial district in this aerial photograph in Frankfurt, Germany, Tuesday, April 28, 2020. The ECB’s response to the coronavirus calmed the markets while setting it on a path that could test its commitment to the price stabilization mission.

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(Bloomberg) –

The European Central Bank says some lenders still did not do enough to strengthen their operations in the European Union before the end of the Brexit transition phase at the end of the year.

Some banks need to make more progress in moving staff and assets to their European units, an ECB spokeswoman said in a statement. Working with national regulators, ECB staff “engaged with these banks to ensure that there is a common understanding of the path to the target operating model,” she said.

The Financial Times reported the statement earlier.

Global banks that have used London as the EU’s hub for decades are spending millions of euros to build units in cities such as Frankfurt, Dublin and Paris to retain customers in the bloc after the UK vote. United in favor of departure. While the ECB has acknowledged the uncertainty over how the divorce will unfold, the watchdog wants the new operations to fall into place quickly and be robust enough to withstand the turbulence.

This means it is not just about assets and employees. Units should also try to be “structurally profitable” as well as “operationally self-sufficient” in key areas, and not overly depend on their parent companies when reserving assets, the statement said.

The latter issue has been critical for European watchdogs, who want much of the risk generated by EU units to be managed locally.

“The ECB is encouraged that some banks have already largely achieved their target operating model or are on track to meet this target,” the spokesperson said.

© 2020 Bloomberg L.P.

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