LONDON: The Bank of England will allow European banks to continue selling their services in the United Kingdom without having to create expensive subsidiaries after Britain leaves the European Union.
The decision, if confirmed, would mean European banks offering wholesale services would not face new post-Brexit hurdles to operating in London , which vies with New York for the title of the world’s financial capital.
A BoE spokesman declined to comment on the report. The central bank is due to publish its approach to future supervision of foreign banks, insurers and clearing houses.
Financial services is Britain’s single biggest tax-earning sector, bringing over 70 billion pounds a year into government coffers. If foreign banks began leaving, the City’s fabric would begin to unravel, industry officials have said.
The EU has proposed that, as a last resort, clearing of euro denominated derivatives done mainly in London should move to the euro zone after Brexit.
By allowing branches of EU banks in London to be supervised by their home regulator, Britain will be hoping the bloc would in return allow euro clearing to remain in Britain.
The UK gesture could also soften European Commission plans, due to be published later on Wednesday, to stiffen the conditions for allowing investment banks from outside the EU to operate inside the bloc. Many of those banks, like Goldman Sachs and Morgan Stanley have their main European operations in London at present.