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British banks could still thrive in Europe: Loophole may allow lenders to keep doing business with reforms set to be introduced by 2018

British banks could still thrive in Europe: Loophole may allow lenders to keep doing business with reforms set to be introduced by 2018

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A loophole in banking rules could allow financial giants based in the UK to keep trading in the EU after Brexit.

Two little-known parts of legislation look set to be used by the big lenders to ensure they can keep doing business as they do now.

It had been feared that British banks, and large multinationals from outside the EU such as American and Swiss lenders, would be barred from doing business in Europe after Brexit, unless they moved an office inside the EU.

Worst-case estimates from consultancy PwC suggest overseas banks could look to move 115,000 people away.

This was because any bank based in an EU country has a passport that allows it to do business in another member state. So a bank with a head office in the UK could offer services in Spain or Germany, even if they didn’t have an office there, and vice versa. After Brexit banks based in the UK would have this passport taken away, experts had suggested.

But many believe that under articles 46 and 47 of the Markets in Financial Instruments Regulation (Mifid), banks outside the European Union could be given a passport provided the rules in their home nation were as good as those inside the EU.

And a second glimmer of hope may also apply. EU banking reforms called Mifid II are set to be introduced by 2018 which could also allow the UK banks to stay trading in the EU.

These rules will allow banks to do some cross-border business with EU states if they are judged to be in a well-regulated environment – and the UK would likely pass that test.

Economist Gerard Lyons, a key voice in the Brexit camp, believes this will give UK institutions access even if the nation stays out of the common market.

fonte mailOnline

 

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