EU Investigates Whether UK Banks Have Moved Enough Workers To Europe
As London and Brussels continue talks over potentially expanding the access for London-based bankers in Europe, something that Britain sacrificed as part of the Brexit trade agreement, and which has inspired an exodus of banking jobs to cities like Dublin and Warsaw, the ECB is stepping up a "desk mapping" review of global investment banks' back-office employees to ensure that enough of them are situated within the bloc.
Because of Brexit, international banks with operations in London and on the Continent need to ensure that key staff who book trades and help manage risk are accounted for within the bloc, where they can be properly "overseen" (ie held accountable ie punished) by European regulators with minimal interference from the Brits.
The review encompasses the European units of Goldman, Citi, JPM, Bank of America, Barclays and Morgan Stanley, among others. The ECB has asked the banks to answer detailed questions about their risk-management setup including where traders and associated risk staff sit and how they process trades, according to Bloomberg's sources.
Five years after the Brexit vote, the EU is making an effort to achieve comparability of current practices at the banks it supervises and ensure they meet certain benchmarks. The review isn't over yet.
“The desk-mapping exercise is at an early stage and still ongoing. Thus the ECB has not yet given feedback to individual banks on its outcome,” an ECB spokeswoman said in a statement to Bloomberg.
In recent years, hundreds of billions of dollars in assets and thousands of jobs have shifted to Paris, Frankfurt, Dublin and Amsterdam and other cities. While that hasn’t yet threatened London’s status as a global financial center, the EU says it expects these trends to continue.
Banks have been slow to meet certain targets to move personnel to Europe since London and Brussels are still talking about a deal to expand regulatory reciprocity in the financial services industry, which could expand access for British banks in exchange for certain allowances on the British side. Meanwhile, the restrictions caused by the pandemic have slowed the transfer of some employees.
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