Bank Of England To Allow EU Banks, Insurers To Operate In UK Post-Brexit

The Bank of England announced on Wednesday that it will allow EU banks and insurers to operated normally in the U.K. post-Brexit and is undertaking a review of its authorizing and supervision policies for international firms.

"The foundation of the Bank of England's approach is the presumption that there will continue to be a high degree of supervisory cooperation between the UK and the EU," the bank said in a statement.

"On this basis, EEA banks and insurers may...apply for authorization to operate as a branch in the UK."

Deputy Governor and Prudential Regulation Authority CEO Sam Woods said in a letter to international financial services firms that this assumption may be revisited as Brexit negotiations proceed, implying that things could change if the talks fail.

"In the event of a non-cooperative relationship, however, there could be implications for how we oversee some EEA firms in the UK," the bank said.

In a parliament select committee hearing, BoE Governor Mark Carney said if co-operation with EU does not materialize, the EEA banks would be asked to create subsidiaries.

The approach to authorization and supervision of international firms will be out for consultation until February 2018 and the PRA will be open for applications from the beginning of 2018, the bank said.

The bank also said that it does not expect any implication of the proposed policy for the current operations of banks and insurers from non-EEA countries such as the US, Switzerland and Japan. This is because the UK has an appropriate level of third country supervisory cooperation with their home state supervisors in light of the systemic importance of the relevant firms.

According to the central bank, there are 160 branches of international banks in the UK, of which 77 are from the EEA, with assets totaling GBP 4 trillion. There are also 110 branches of international insurers in the UK, of which 80 are from the EEA, the bank added.

The BoE also said that it is issuing guidance to on its approach to international central counterparties, or CCPs.

Deputy Governor Jon Cunliffe said in a letter to CCPs that the government announced on Wednesday that it intends to give the BoE new powers under UK law to recognize non-UK CCPs.