U.K. Mulls Options to Help Banks After Brexit, Davis Says

  • Brexit Secretary David Davis says stability for City ‘central’
  • Says keeping equivalence for London banks and clearing is key

South Africa's Fuzile on Gordhan, Investor Confidence

The U.K. government is looking at "all possible options" to protect financial services from disruption after Britain leaves the European Union, Brexit Secretary David Davis said on Thursday.

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Davis said he and Chancellor of the Exchequer Philip Hammond are “determined to get the best possible deal” for London-based banks and suggested he would consider calls from business leaders for a transitional deal to provide “stability” for financial services.

David Davis

Photographer: Chris Ratcliffe/Bloomberg

Speaking in Parliament, he said it was one of his “major aims” to make sure the U.K. regulatory regime maintains “equivalence” with the EU after Brexit to help keep euro-denominated clearing in London. Davis also promised that highly skilled migrants would still be able to come to the U.K. to work, despite a government promise to limit immigration.

"The chancellor and I are determined to get the best possible deal for our financial-services sector, a crucial part of our economy," Davis said during a question-and-answer session in the House of Commons.

Brussels Talks

Davis spoke as Prime Minister Theresa May traveled to Brussels for her first EU summit on Thursday. She is due to update other EU leaders on her plans and will tell them there is no chance that Britain will remain in the 28-member bloc. Business leaders have called for the government to negotiate a transitional deal with Brussels in order to help them adjust after Brexit and avoid the disruption of a cliff-edge departure from the single market.

Recent comments pointing to a so-called hard Brexit have hit sterling, which has lost more than 17 percent since the June referendum. Davis has said the falling pound can help exports, but on Thursday he acknowledged it also had "disadvantages," such as fueling inflation.

Lawmakers questioned Davis repeatedly on his plans for helping financial services in the U.K. manage the disruption of Brexit.

With the European Central Bank demanding the euro trades are cleared in the euro area, he was asked whether he believed euro-denominated clearing would be permitted in the U.K. after Brexit.

‘Major Aims’

“It is certainly one of our major aims,” Davis replied. “We start at the point we leave, as it were, with absolute equivalence because we meet all of the requirements at that point and I would seek to ensure that was maintained.”

Theresa Villiers, a former cabinet minister who supported Brexit, asked Davis to make securing a transitional deal for financial services an urgent priority in his Brexit negotiations. "They can’t wait to see what the final deal looks like," she said. Davis told her he wanted a "smooth and orderly exit" for Britain from the EU. 

“It would not be in the interests of either side, either Britain or the European Union, to see disruption, and to that end we are examining all possible options,” he said. “Having London as the number one global financial center, sitting at the heart of the global capital markets, is not just in the U.K.’s interest, it’s also in the European Union’s interest and I’m confident everyone will see the value in not undermining that."

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