Britain’s financial regulator is expecting 130 European financial services firms to submit licence applications in order to gain access to the UK market after Brexit.
Sam Woods, chief executive of the Prudential Regulation Authority (PRA) and a deputy governor at the Bank of England, warned that it would be “unwise” for companies to bank on a transitional agreement between the UK and EU, which could temporarily extend cross-border agreements for financial services.
“I think we are likely to see at least 130 applications to be authorised here in the UK,” he told Reuters at the news organisation’s Financial Regulation Summit in London.
The PRA earlier this summer collected details from more than 400 banks and financial firms with cross-border activities between the UK and the EU, including subsidiaries of US investment banks based in London, on their preparations for all scenarios in the Brexit negotiations, including a “no deal” outcome.
Sam Woods is head of the Prudential Regulation Authority (PA)
But the PRA – which aims to monitor systemic risk and identify credit bubbles – has yet to decide whether the UK branches of EU firms will have to convert into subsidiaries, which would bring them under the regulator’s supervision.
Mr Woods told Reuters that he was likely to make that decision within two to three months, but said that timeline could change if Britain strikes a transitional deal with the EU.
Last week, Prime Minister Theresa May offered to continue paying into EU coffers during a two-year transition after Britain leaves in 2019. Under her plans, the UK and the EU would continue to enjoy the same access to each other’s markets.
Mr Woods told the news agency that inbound firms – banks based in the EU who want to operate in the UK – have been slower in preparing for Brexit, which will see Britain lose its membership in the single market for financial services.
Outbound firms, or UK-based banks hoping to continue serving clients in the EU, have been quicker to adapt.
“We are having to push the inbounds to move on with their thinking,” Mr Woods told Reuters.