London Throws Gauntlet to Europe Over Financial Center FutureBy and
EU must choose from urge to ‘inflict harm,’ or cherish London
European financial centers pitch for share of London spoils
Europe must choose between the urge to “inflict harm” on the City of London or recognize its role as the world’s biggest financial center in elevating the continent’s standing, a top London official said in Frankfurt.
“The question for the EU is: Does it see the City of London as a European asset that it treasures and nurtures and wishes to develop for the wider interests of the people of Europe, or does it see the City of London as innately undermining the narrower interests of the European Union?” Jeremy Browne, Special Representative for the City to the EU, said at the annual European Banking Congress on Friday.
Following the “natural adjustment” that will come with the U.K.’s departure from the EU, will the bloc “try to inflict additional harm on the City of London to make a broader political point even if that is not the interests of European Union or the wider citizens of Europe?” Browne said.
His remarks came at the end of a week-long conference that began with European financial centers making competing pitches for any financial jobs that flow out of London in the aftermath of the U.K.’s vote to leave the EU in June. Banks leaving London for Europe as a result of Brexit could give the continent’s capital markets a much-needed boost, said Ignazio Angeloni, a board member at the European Central Bank’s supervisory arm, in an interview on Thursday.
Banks based in the U.K. have started sounding out euro-area supervisors about their post-Brexit future, Sabine Lautenschlaeger, vice chair of the European Central Bank’s Supervisory Board, said on a panel at the Frankfurt conference on Nov. 15.
“We have already many banks asking for interviews and meetings so that they can identify where are our pressure points and where our methods differ” from U.K. supervisors, Lautenschlaeger said. “For sure we are preparing.”
The ECB “will be prepared to welcome” banks seeking to leave the U.K. if it can ensure they’re not engaging in regulatory arbitrage, Anneli Tuominen, the director general of Finland’s Financial Supervisory Authority, said in an interview on Friday.
“London is a test study” in Europe’s resolve, special envoy Browne said. “We contribute massively to the capital markets and the services that are available to businesses across Europe. We very much regard ourselves not as a British asset, but as Europe’s global asset.”
Global bank executives are softening their warnings that the U.K.’s looming withdrawal from the EU will spur an imminent exodus of staff from London. Bankers are gaining confidence that U.K. Prime Minister Theresa May will be able to secure a lengthy transition period that would carry them over from the current rules to whatever trade agreements are agreed with the EU, according to two people with knowledge of their firm’s contingency plans. That’s led to more measured language from many of the industry’s leaders.
“Wait and see is also UBS’s attitude toward Brexit," UBS Group AG Chairman Axel Weber said Wednesday at a conference in the U.K. capital. “No doubt London will remain an important financial center. UBS will be here.”
BNP Paribas SA Chairman Jean-Adrien Lemierre said Brexit “shouldn’t dominate the whole discussion” about the future of banking in Europe.
“We have made a view to be calm, quiet and not to make any decisions for the time being,” Lemierre said at the Frankfurt conference, referring to BNP. “Why? Because we are on the safe side, we are European, we don’t need to be in London to have a European passport. We shall be comfortable operating from everywhere and we shall serve the clients, if we are not able to serve them from London.”