ECB concerned about bank efforts to avoid regulation

[FRANKFURT] The European Central Bank is becoming concerned that banks, particularly in post-Brexit Europe, may be seeking to exploit loopholes to get looser regulation without a reduction in risk, ECB supervisor Daniele Nouy said on Friday.

Banks may be shifting operations to countries with more lax regulation, moving activities into the so-called shadow banking sector, or setting up businesses that fall under local supervision, escaping the ECB's more thorough checks, Ms Nouy said.

"This is not a movie where a rogue hero happily flouts all the rules to save the world," Ms Nouy told a conference in Helsinki.

"This is about the stability of the banking sector, the prosperity of the economy and the wealth of society as a whole."

"Cross-jurisdiction arbitrage has become even more of an issue since the United Kingdom decided to leave the EU," she said.

"Regulatory arbitrage is a matter of great concern for regulators and supervisors."

REUTERS