The European Banking Authority (EBA) has published an opinion on issues related to the departure of the UK from the EU. The opinion is addressed to the European Commission and competent authorities. It is intended to provide guidance on supervisory expectations and address regulatory and supervisory arbitrage risks that may arise as a result of increased requests from entities seeking to relocate to the EU27 within a relatively short period of time.

The opinion assumes that after Brexit the UK effectively becomes a third country for the purposes of the EU legal framework. However, it is also without prejudice to any specific arrangements that may be reached between the UK and the EU.

The opinion covers a number of important areas, namely:

  • the authorisation process;
  • equivalence access for the provision of investment services;
  • internal model approvals;
  • internal governance and risk management; and
  • resolution and deposit guarantee scheme issues.

In terms of resolution and deposit guarantee schemes the key principles in the EBA opinion are:

  • changes arising from Brexit should be factored into resolution authorities’ resolution planning;
  • institutions and authorities need to assess their stock and issuance plans for instruments used to meet the minimum requirement for own funds and eligible liabilities in light of Brexit, and in particular their reliance on instruments issued under English law; and
  • deposit guarantee schemes should be prepared to ensure that EU27 depositors maintain their protection after Brexit, by assessing (where relevant) the equivalence of the UK’s deposit protection regime at the date of Brexit, and should consider putting in place cooperation arrangements with the UK deposit guarantee scheme after Brexit.

View EBA opinion on Brexit, 12 October 2017