ECB: banks must transfer staff after Brexit despite virus

(Bloomberg) – The European Central Bank said banks that are implementing their Brexit plans will not be able to use the ongoing pandemic as an excuse to delay the transfer of staff to the European Union.

Future staff transfers should be planned with the coronavirus “as a baseline assumption and subject to minimal delays,” the central bank said. Remote work arrangements do not change the need to have enough staff in the European Union to manage the risks taken by banks and ensure effective supervision by the European Central Bank, he said.

With less than two months to go until the Brexit transition period expires, international banks have beefed up their operations in the European Union to ensure they can serve customers, given the prospect of UK-based companies they will not retain passport rights in a business agreement. The pandemic has complicated the already expensive relocation of staff and assets, as employees face travel restrictions and socially distanced interaction with schools and real estate agents.

The European Central Bank said that while it has provided banks with flexibility where necessary, “in principle no additional flexibility is envisaged.” The Frankfurt-based institution expects evidence to show that staff have been or will be properly integrated into new European Union banking centers, an update from its banking supervision unit reported on Wednesday.

The European Central Bank said some banks have yet to complete their Brexit plans, in particular to ensure that contracts with clients are updated to reflect the names of European Union entities rather than UK units. That’s a key source of risk for the industry because not updating those deals could cause market turmoil if they expire.

“Overall, year-end risks for banks directly supervised by the European Central Bank appear to be contained,” the regulator said.

Still, moving personnel and assets is just a first step, according to the European Central Bank. The institution added that banks must be “structurally profitable” and not depend too much on operations in countries outside the European Union; that they must obtain funds denominated in euros for their business in the European Union; and that banks should prepare for the possible loss of access to UK clearing houses.

Nota Original:ECB Says Virus No Excuse for Banks to Miss Brexit Staff Goal (1)

©2020 Bloomberg L.P.

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