Brexit Bulletin: Banks Seek a Special Deal

But key EU leaders won't talk until May activates Article 50

Maisonneuve: London Likely Loses on Margin From Brexit

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Banks want Theresa May to strike a Brexit deal just for them.

The prime minister is being lobbied by finance companies to win them an interim agreement with the European Union before formal exit talks start, two people familiar with the matter told Bloomberg's Richard Partington and Gavin Finch. 

A transitional pact would seek to preserve passporting, which ensures the ability of banks to freely sell services and products across the EU, beyond the end of two years of official negotiations, said the people, who asked not to be identified because the matter is private. 

The pitch may prove unrealistic because European leaders, including German Chancellor Angela Merkel, have repeatedly said they won’t engage in informal talks before May activates Article 50, which sets the timeframe for withdrawal. The threat of banks is, if they don't feel secure in the U.K. they may soon start moving staff and operations from London.

Separately, Lionel Laurent of Bloomberg Gadfly detects a change in tone from bankers, and that even those who once fretted about the impact on London's future as Europe's financial center are now sounding more optimistic.

Putin Warning

Russian President Vladimir Putin said it may not just be the European Union which shrinks, but also the euro-area.

In an exclusive interview with Bloomberg News, Putin said he couldn't rule 0ut a group of stronger companies ending up as the core membership of the single currency. 

"I don’t rule out that there could be some decisions made that would consolidate a group of countries with equal levels of development and, thereby, in my opinion, strengthening the euro," Putin said in Vladivostok, on Russia’s Pacific coast.

He pointed to Russia keeping 40 percent of its currency reserves in euros as evidence that it wasn’t in his country’s interest for the 19-member bloc to "collapse."

Davis Upbeat

Chief Brexit negotiator David Davis is upbeat he can secure less immigration and continued access to the EU's single market.

Speaking in Northern Ireland yesterday, Davis said it's in Europe's interest to have a "good trading relationship" with Britain and that even as there are more controls on the number of people entering the U.K. "what we will seek to do ideally is have a tariff-free access." European leaders have warned the U.K. it must accept freedom of labor movement if it wants to maintain its current trading relationship.

European Commission Vice President Jyrki Katainen said in an interview in Bucharest that he sees the U.K. opening negotiations "sometime early next year" although "the sooner the better" given companies don't like uncertainty. 

Not so sure about that is Stephen Harmston, head of reports at pollster YouGov. He said once Article 50 is triggered, "things could change for the worse quickly" for companies. For now, executives are brushing aside their doubts, he said, with the YouGov/Cebr Businsss Confidence Index rising to 109.7 in August from 105 after the referendum.

Meantime, senior Conservative lawmaker Andrew Tryie says in a report for think tank Open Europe that May's government should release an "early, full and detailed explanation" of its negotiating position. 

Scotland's Auld Issues

The Scottish National Party's new effort to win independence may soon run into some old challenges.

While the Brexit vote allowed SNP Leader Nicola Sturgeon to revive the push to break from the U.K., lingering questions over a future currency, falling oil revenue and swelling budget deficit remain unanswered. 


"The issues that came to the fore in 2014 over the economic viability of Scotland are even a lot worse and haven’t been resolved at all," said Craig McAngus, lecturer in politics at the University of Aberdeen. 


On the Markets

The pound is enjoying its longest run of gains since before the referendum amid signs of economic resilience, after a construction index surged in August the most since 2013. European markets were heading towards a positive end to the week.

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And Finally...

Pernod Ricard SA, the world’s second-largest distiller, isn't planning to change its U.K. strategy despite the Brexit vote. The reason? Leaving the EU won't stop Britons from drinking, says Chief Executive Officer Alex Ricard. Cheers to that.

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