The Association for Financial Markets in Europe has published a report entitles “Planning for Brexit: operational impacts on wholesale banking and capital markets in Europe”. The report aims to provide policymakers and other industry stakeholders with a fact-based analysis of how the operational impacts and transformation challenges of Brexit are likely to affect the financial services industry. Key findings of the report include:
- Brexit presents clear challenges to the EU banking industry and the uninterrupted supply of banking services around the EU;
- Brexit is likely to result in a significant transformation activity as banks, clients, market infrastructure and regulators simultaneously carry out their plans to prepare for the UK’s departure from the EU;
- while banks are planning to take steps during the 2 year withdrawal period to minimise the impact of a hard Brexit on the provision of client services and disruption to the market, these are interim mitigating measures and will not fully replicate the current ability of banks to service clients based on current access across the single market. During this period banks will need to work closely with the regulators to agree a pragmatic approach to facilitate the required structural transformation within a compressed timetable;
- once the terms of the permanent relationship between the UK and EU are known, banks will need further time to put in place strategic solutions to comprehensively service clients in the long terms and to facilitate an orderly transition; and
- given the complexity and scale of the changes required, a transition period of 3 years would be needed to give banks (as well as other industry participants) time to transition to the new permanent arrangements.
View AFME report analyses operational impact of Brexit on EU banking sector, 2 February 2017