EBF advisors: Pauline Guérin, Sergio Tringali, Jacopo Borgognone
Publication date: 29 May 2020
The ongoing Brexit negotiations on the future relationship will have a major impact on customers, businesses and citizens on both sides of the Channel. Irrespective of the outcome, the impact will not mean business as usual as the current situation where the UK is still part of the Single Market. Equivalence in the financial sector will most probably be a major tool for regulating interactions with third countries but will not replicate the benefits of Single Market membership. Against this background, the European banking sector calls on both sides to enable the development of the closest possible third-country relationship with the UK, to ensure a level playing field and fair competition, to provide legal clarity, and to build the trust that is needed to maintain a mutually beneficial bilateral relationship.
The purpose of the current paper is to outline the banking sector’s expectations for the future relationship in financial services, as well as providing views on how an equivalence regime could accommodate a mutually beneficial bilateral relationship between the EU and the UK, by preserving financial stability, market integrity, investor and consumer protection and fair competition based on a level playing field. While it is covered to a lesser extent in the paper, the UK’s assessment of the EU’s framework is as important as the EU regime. The following analysis presupposes a deal, the absence of which would raise a separate set of significant risks, which we analysed in 2019. In this context, with the chance of a no-deal scenario still very high, we urge both parties to agree to an extension of the transitional arrangement before the end-June 2020 deadline to give all parties more time to reach a satisfactory agreement, especially considering the exceptional circumstances arising from the ongoing health crisis. In any case, the European Banking Federation calls on all its members and on banks to finalize preparations for the end of the transition period and to envisage all the scenarios possible
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Have a look at the EBF Brexit web page. It brings together information to help bank customers prepare for Brexit
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Brexit: Statement on UK departure from the EU
BRUSSELS, 30 January 2020 – The European Banking Federation issued the following statement on the upcoming departure of the United Kingdom from the European Union.
The departure has been made possible by last week’s approval of the Withdrawal Agreement by both the Houses of Parliament in the UK and yesterday’s vote of the European Parliament in plenary session. This paves the way for an orderly Brexit on Friday 31 January 2020, as advocated by the EBF since the beginning of the withdrawal process.
Says Wim Mijs, Chief Executive Officer of the European Banking Federation:
“We are sure that shared values will continue to unite the two sides of the Channel and will drive the negotiations on the future trade agreement. Although a separation in the EU membership will affect trade and the economy, we are confident that our sector will continue to meet the needs of customers in providing banking services – payments – and access to financial markets.
Now that the transition period is about to start, it will be fundamental to define the future trade relationship between the EU and the UK. The EBF stands ready to contribute to the trade talks and will continue engaging with EU institutions and ESAs.
Banks on both sides of the Channel want to be able to continue to serve businesses and households with as little friction as possible. This, as well as maintaining financial stability and ensuring consumer protection, should be a key objective for financial services in the upcoming trade talks.”
On its website, the EBF has brought together a wide range of Brexit service pages from its members as well as EU bodies: https://www.ebf.eu/brexit/
Media contact:
Raymond Frenken, Director of Communications, +32 496 52 59 47, r.frenken@ebf.eu
EBF Mediacentre: +32 2 508 3732
About the EBF:
The European Banking Federation is the voice of the European banking sector, bringing together national banking associations from across Europe. The EBF is committed to a thriving European economy that is underpinned by a stable, secure and inclusive financial ecosystem, and to a flourishing society where financing is available to fund the dreams of citizens, businesses and innovators everywhere. Website: www.ebf.eu
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Brexit: financial services are better prepared
BRUSSELS, 5 November 2019 – European financial service firms are more prepared than before to handle a possible no-deal Brexit scenario. According to an internal consultation among members of the European Banking Federation, many financial service firms have continued to step up their contingency planning in recent months.
The European Banking Federation, which brings together national banking associations from 32 European countries, continues to advocate in favour of a managed Brexit that is based on an official Withdrawal Agreement between the EU and the UK. This would enable a short transition period that would give financial service firms, and other stakeholders in the economy, more time to prepare for a future agreement which still needs to be negotiated.
Although a separation in the membership of the European Union may have an impact on trade and the economy, the EBF remains confident that the banking sector will continue to support European economies and serve its customers in the event of a no-deal.
Says Wim Mijs, Chief Executive Officer of the EBF:
“Thanks to the ‘flextension’ until the end of January there is more time to facilitate the UK leaving the EU with an agreement. The clock has been reset but continues to tick fast. We hope that the UK will find a way forward soon. Meanwhile our banks and other financial service firms across Europe are even more prepared and continue to implement their Brexit contingency plans.”
If they have not already done so, businesses and retail customers whose finances involve the UK and the EU are advised to contact their bank to make sure that they won’t face problems that can be prevented. On its website, the EBF has brought together a wide range of Brexit service pages from its members as well as EU bodies: https://www.ebf.eu/brexit/
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Brexit: WTO implications for banks in case of no-deal
BRUSSELS, 28 October 2019 – The European Banking Federation has published a new fact sheet that explains which global trade rules will apply to European banks in the event of a no-deal Brexit. In the case of such a scenario, all trade between the EU and UK will be governed by the international rules agreed at the level of the World Trade Organisation, known as WTO. The fact sheet specifically addresses the WTO implications for banks.
Although the risks of the UK leaving the EU without an agreement in place to regulate its trade relations with the EU are not as high as they used to be, the paper addresses which rules will be applicable to regulate the future relationship between EU banks and the UK. In such hypothesis, the WTO rules will certainly apply from day one.
In particular, the following consequences are expected to occur:
- First of all, the General Agreement on Trade in Services (“GATS”), considered the WTO basic agreement on trade, including also the banking sector, will come into force.
- While the GATS does not replicate EU membership, it will still play an important role in case of a no-deal Brexit. GATS rules will be helpful to handle the absence of agreements:
1) The GATS will provide a baseline of protection: in principle, it will not allow the EU (or the UK) to discriminate against EU/UK banking services and service suppliers as compared to like services and services suppliers from other WTO members.
2) The GATS establishes key rules on recognition of prudential requirements: The WTO does not require its members to recognise the prudential requirements of other members. However, where it does, it must offer adequate opportunity to other WTO members for similar treatment.
3) It is important to distinguish between Member States opting for Mode 1 (supply of service from the territory of one Member into the territory of any other Member) and those opting for Mode 2 (supply of a service in the territory of one member to the service consumer of any other member state).
WTO banking commitments for (at least) the EU-12 Member States subscribing to the Understanding (BE, DE, DK, ES, FR, GR, IE, IT, LU, NL, PT, UK) are wide in relation to Mode 2, but not for Mode 1. The lack of market access commitments for Mode 1 has led to the prevailing view that the WTO cannot provide any basis for a right in principle to be able to provide banking services from the UK into the EU (or vice-versa).
The fact sheet was produced in cooperation with Herbert Smith Freehills LLP and with support of the Dutch banking association NVB .
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]]>BRUSSELS, 1 March 2019 — The European Banking Federation has launched a dedicated page on its website that brings together information from across Europe needed to support preparations for the withdrawal of the United Kingdom from the European Union at the end of March.
On Friday 29 March 2019 the UK will leave the EU. A hard, cliff-edge Brexit has become a very real scenario because the transition arrangement between the UK and EU remains to be approved by the British parliament. As long as this approval is pending, bank sector clients whose finances involve the UK and the EU face uncertainty. Both businesses and retail customers are advised to contact their bank to make sure that they won’t encounter problems that could have been prevented.
Like banks across Europe, many companies have already taken contingency measures to ensure that their business continues to run after 29 March. However, many of Europe’s small and medium-sized companies are not yet ready. The European Banking Authority is encouraging banks to communicate to customers over Brexit. The European Central Bank also has underlined the need for banks to inform clients.
Key EU institutions such as the European Commission, the European Central Bank, the European Banking Authority have information available for companies and consumers. A number of national banking associations in Europe – members of the European Banking Federation – also have created dedicated national campaigns to support customers, both business and retail.
The links to these websites , and also to other relevant sources of information that can help clients prepare for Brexit, are available at www.ebf.eu/brexit.
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EBF statement on UK parliament’s Brexit vote
BRUSSELS, 16 January 2019 – Following Tuesday’s vote in the UK Parliament on the Brexit deal agreed in November between the European Union and the UK government, Wim Mijs, Chief Executive Officer of the European Banking Federation, said:
“We deeply regret that the United Kingdom is not able to provide clarity on its Brexit course. Courageous leadership decisions now are essential. It is still not too late to avoid a hard Brexit cliff-edge, but the clock is ticking fast. We hope that the UK will find a way forward, and it’s vital that policymakers and regulators across the EU and UK manage the risks from a no-deal exit. In the meantime, banks across Europe are well prepared and continue to implement their Brexit contingency plans.”
Media contact:
Raymond Frenken, Head of Communications
r.frenken@ebf.eu +32 496 52 59 47
About the EBF:
The European Banking Federation is the voice of the European banking sector, bringing together national banking associations from 45 countries. The EBF is committed to a thriving European economy that is underpinned by a stable, secure and inclusive financial ecosystem, and to a flourishing society where financing is available to fund the dreams of citizens, businesses and innovators everywhere. Website: www.ebf.eu Twitter: @EBFeu
Subscribe to the EBF Weekly + FinReg Agenda
Every Friday at noon you can receive the EBF Weekly + Financial Regulation Agenda. This agenda presents an overview of upcoming European and international meetings and conferences in financial regulation, as well as important general financial and economic events and key EBF meetings for the week ahead. CLICK HERE TO SUBSCRIBE
Subscribe to the EBF Morning Brief
The EBF Morning Brief is published Monday through Friday morning and brings you the top banking headlines, relevant announcements from the EU institutions and the latest from the EBF and its members, national banking associations in 32 countries in Europe. CLICK HERE TO SUBSCRIBE
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