Cameron Fails to Sway Hollande as French Fight U.K. Bank Shield

  • Traditional rivalry marks negotiations before EU summit
  • U.K. leader held talks with Hollande Monday in French capital

In or Out? U.K. and EU Officials Mull Membership Terms

David Cameron failed to win over President Francois Hollande to his European Union reform agenda as France held to its objections to the British leader’s plans.

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With France heading a group of euro-area countries unhappy with Cameron’s push for safeguards for banks in the City of London, the prime minister met with Hollande for an hour at the Elysee Palace in Paris on Monday evening. The meeting was constructive but differences remain, French officials said, adding that Hollande insisted the U.K. could have no vetos over euro-area legislation. Earlier, European Central Bank President Mario Draghi weighed into the debate, saying the U.K. and the rest of the EU both needed to benefit from any deal.

Diplomacy is increasing in the run-up to the gathering of EU leaders in Brussels on Thursday when Cameron aims to strike a deal he can sell to the British people ahead of a referendum on whether to stay in the EU. France’s criticism of some of Britain’s demands to shield its banks from rules governing the euro region has emerged as one of the biggest sticking points. A new poll showed an increase in support among British voters for leaving the bloc.

“The ideal objective of this negotiation would be to anchor the U.K. in the European Union and having the European Union and the U.K. working together -- both have to draw benefit from this,” Draghi told lawmakers in the European Parliament in Brussels. The ability to further integrate the euro area and to protect the EU’s single market is essential, said Draghi, whose central bank is in charge of supervising lenders in the euro bloc.

France argues that the plan thrashed out between Cameron and EU President Donald Tusk would create advantages for banks based outside the euro area, according to a European official with knowledge of talks in Brussels last week. The French insisted non-euro countries couldn’t have a veto over EU legislation and there shouldn’t be differences in bank standards, and they were supported by other nations both inside and outside the currency union, the official said on condition of anonymity because the talks were private.

HSBC Plans

Tensions between France and Britain have been a regular feature of European history with Hollande’s predecessor Charles de Gaulle twice vetoing the U.K.’s attempts to join the earlier incarnation of the EU in the 1960s. Only after the former general stepped aside did Britain get to join the club in 1973.

“The French have a sense of exasperation with the British because they think the U.K. already does pretty well out of the European Union,” said Paul Smith, a lecturer on French politics at the University of Nottingham. “But ultimately Hollande will want to do a deal because he wants to look statesmanlike in the run-up to the presidential election” in France in 2017.

HSBC Holdings Plc Chief Executive Officer Stuart Gulliver said Monday he would probably move about 1,000 investment bankers to Paris if Britain decides to leave the EU in a referendum that could come as early as June. Gulliver said in an interview that such a decision would have a “significant impact” on the group’s investment-banking division.

A new poll published Monday by ComRes for ITV showed an 8 percentage-point lead for remaining in the EU, compared with 18 points in its previous poll. Telephone surveys have previously shown double-digit leads for staying in even as more frequent online polls have suggested the referendum could go either way. The ComRes telephone survey of 1,105 adults was conducted Feb. 11 to Feb. 14; no margin of error was specified.

Unanimity Needed

The U.K. needs the endorsement from all 27 other EU leaders for the proposed changes to take effect. Cameron will meet several of the European Parliament’s political group leaders in Brussels on Tuesday as he’ll need their support in changing the U.K’s EU membership terms.

Tusk, who met with Hollande at noon on Monday before going on to Bucharest and then Athens, Prague and Berlin on Tuesday as he tries to persuade leaders to back the deal, said he hopes to reach an accord this week.

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