What are the UK’s banks doing to prepare for Brexit?
UK Banking Results for 2018 – the sector continues to improve but face Brexit headwinds
12/03/2019
2019 UK Top 5 Banks – Top 5 Financial Results
17/03/2020
Firstly, it is worth understanding the key issue that faces the UK’s largest banks under a hard Brexit scenario.
What is the impact of Brexit on UK banks?
In a hard Brexit situation, where there is no deal or agreement in place that covers financial services, then all UK based financial services organisations lose the ‘passporting’ rights at the point the UK leaves the EU (currently set for 29th March 2019). This means type of financial companies are unable to serve EU clients from the UK and would need to have an EU based legal entity with banking license to continue ‘passporting’ across Europe.
What is the latest on Brexit?
The BBC has produced a helpful guide to Brexit jargon and also offers ongoing updates on the political process.
How are the UK’s top 5 banks preparing for Brexit?
Due to the ongoing political uncertainty that surrounds the type of Brexit that maybe delivered, the UK’s top 5 banks have begun preparations for the UK’s departure from the EU. Here is summary of their respective announcements on the topic:
Barclays
Plans include moving impacted assets and clients to its Dublin business unit which allows the organisation to continue serving its European business from within the EU area.
HSBC
As a globally focused bank, HSBC is using its French operations to create a European HQ and aligning the bank’s Irish and Polish subsidiaries under the Paris based business.
Lloyds
Germany is the destination of choice for Lloyds, running its European banking business from Berlin. However, Lloyds is setting up two new subsidiaries in Frankfurt for bond trading and insurance.
RBS
Government owned RBS, has developed contingency plans to move a third of its investment banking clients to its regulated entity in Amsterdam to safeguard against a no-deal Brexit.
Santander
The UK business has offered very little detail on their strategy with their announcement: ‘Our Brexit preparations are comprehensive and we have dedicated significant focus to ensure we can continue to serve our customers whatever the outcome.’ However, worth bearing in mind the UK bank’s parent is the Spanish bank Banco Santander, which offers the required operating model to provide ongoing services to European customers.
