Foreign banks face new EU rules for more scrutiny

London

NINETEEN foreign banks in the European Union will need to set up new holding companies so that regulators can scrutinise them more closely, an EU discussion paper says, mirroring steps taken by the United States.

The European Commission proposed last November that banks headquartered outside the bloc consolidate their EU activities under an "intermediate parent undertaking" or IPU in response to US moves to require foreign banks to set up such companies.

The commission, which is the EU's executive, has now fleshed out its thinking and has made a preliminary estimate that 19 foreign banks will have to set up an IPU. Between them they operate via 53 subsidiaries and 53 branches, with 35, more than a …