EU holding line in opposition to passporting for British banks after Brexit

BRUSSELS (Reuters) – European Union negotiators see no room for dialogue with Britain on sustaining “passport” entry to EU monetary markets for its banks after Brexit, however they’re keen to have a look at free commerce within the sector, diplomats mentioned.

Speaking after EU officers briefed representatives of the opposite 27 member states on Tuesday, a number of diplomats who have been current advised Reuters that there seemed to be some variations amongst governments over how a lot entry to EU clients they have been keen to provide banks and different monetary companies from London.

But, mentioned one mentioned, “On financial services, it is nowhere close to the access one gets as a member state or through the EEA (European Economic Area). There will be no passporting rights.”

Michel Barnier, the EU’s Brexit negotiator, has already made clear in public that Brussels will reject recommendations from the City of London that establishments preserve the “passports” that permit them to supply providers throughout the 28-nation bloc.

He has, nevertheless, mentioned that some British rules might be handled as “equivalent” to the EU supervisory regime, giving some favorable entry in some sorts of business.

That would imply banks in Britain, together with the London subsidiaries of global gamers from the United States, Japan and elsewhere, dropping the automated proper to supply the identical providers in some other EU nation. However, they could provide particular merchandise, the place UK rules have been deemed “equivalent”.

Otherwise, banks could arrange new EU subsidiaries, involving further price, together with having to inject capital into these items.

British companies have been pushing to be granted a sweeping “equivalence” bundle, however EU officers and diplomats say that isn’t workable, primarily due to difficulties in agreeing a authorized manner to make sure that British guidelines don’t diverge from the EU‘s.

At Tuesday’s assembly, a part of a sequence of “seminars” by the EU govt workforce with nationwide envoys because the EU prepares for talks in April on a post-Brexit relationship, indicated a broad consensus behind that view, a number of diplomats mentioned.

Because Britain was leaving the EU’s single market and rejecting its guidelines, together with arbitration by the EU courtroom, one mentioned, ”it’s clear that they are going to lose passporting rights as that is a part of the inner market and our regulatory regime.

“When they do that, the only other alternative is what we have in some of our FTAs,” the individual added, referring to free commerce agreements the EU has with different international locations.

Barnier has mentioned that free commerce accords have previously provided solely restricted entry for monetary providers suppliers, he has mentioned there was a willingness to have a look at the probabilities of equivalence.

Some envoys expressed warning about how far that might be accomplished. Others have been extra open to nearer cooperation.

“Equivalence” could be granted “case by case” to sure sorts of exercise, the diplomats have been advised.

“It will, at best, be much less, and only specifically justified per sector. That’s the rub,” considered one of them mentioned. Some areas of business wouldn’t have the ability to get such a deal.

“The key message was that given the UK’s red lines,” one other diplomat mentioned, “a free trade agreement is the only possible cooperation scheme.”

Another participant at Tuesday’s assembly mentioned: “The EU offering the equivalence option to the UK in financial services is the best option they can hope for. The presentation … was pretty straightforward: equivalence is a possibility, if the Brits can agree to not changing their legislation much.”

London has, nevertheless, been at odds with Brussels on banking guidelines as a member – it opposed, for instance, strikes to manage govt pay and bonuses – and the government insists it should go away the oversight of the European Court of Justice. And so settlement that guidelines are in concord could show troublesome.

EU officers are additionally how Brussels and London might cooperate on setting rules that achieved shared objectives – as they do with, say, the United States at current.

Writing by Alastair Macdonald, modifying by Larry King

Our Standards:The Thomson Reuters Trust Principles.

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