The European Central Bank has published the introductory statement made by the Vice-Chair of its Supervisory Board, Sabine Lautenschlager. The statement is entitled Caution should be the life of banking.

When discussing Brexit the statement provides:

“We are aware that it is a burden for UK banks to apply for a new licence in the EU. With a view to internal models, we would aim to be accommodating regarding the timing. There will be a transitional period in which new euro area entities might use internal models that have not yet been approved by the ECB.

 But of course, there are conditions attached. First, the relevant models must have been approved by the UK’s Prudential Regulation Authority. We would also reflect on any comments on the quality of the models from our UK colleagues. Second, the banks must have applied for internal model approval in the euro area. The transitional period will cease as soon as we have approved or rejected the bank’s model application.”

 View Caution should be the life of banking, 22 March 2017