UK downplays risk of EU ‘land grab’ of London traders
UK REGULATORS are watching out for a “land grab” of London traders by the European Union (EU), though they are satisfied with the post-Brexit personnel moves so far, the head of the Prudential Regulation Authority (PRA) said.
PRA chief executive Sam Woods said on Tuesday (Dec 13) that the watchdog always knew the European Central Bank (ECB) would want more banking roles in the bloc. He added that a reasonable compromise had been reached between regulators.
“Our key interests have been making sure that any changes taking place are based on proper regulatory concerns, and not a land grab, and that the new structures, which are of course a bit more complex than what we had before Brexit, can be overseen and risk managed properly,” he said.
“On both scores, I think we’re fine.”
Some of the world’s biggest banks are under pressure to move more traders into EU cities such as Paris, Frankfurt and Amsterdam. The ECB said in May that lenders setting up units in the euro area were still too dependent on operations outside the region. It found that about a fifth of the trading desks it reviewed “warranted targeted supervisory action”.
Goldman Sachs is shifting part of its euro swaps trading desk from London to Milan. Meanwhile, Citigroup moved its European markets head Fabio Lisanti to Paris, where he is taking charge of the bank’s trading business in the region, excluding the UK. Overall headcount at Citi’s Paris office is expected to increase to 600 people over the next two to three years, from around 350 today.
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Woods said the ECB “has always been clear that part of not having an empty shell, or a brass plate, in its jurisdiction meant having some first-line staff in the jurisdiction”.
“We made the same point ourselves, it’s just a question of degree,” he added. “The numbers we’re talking about of traders remain a very small fraction of the trading population.”
Bank of England governor Andrew Bailey noted that Brexit provided an opportunity for Britain to reset regulations, which the central bank will take.
“The post-financial crisis regulations have served an important purpose – the system is more robust. However, the mere passage of time does not mean those regulations are no longer needed – far from it. They should be kept relevant and amended,” he said. BLOOMBERG
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