European banks are calling on policy makers to avoid Brexit brinkmanship that could damage financial markets.
The European Banking Federation, an umbrella group for 32 national banking lobbies and 3,500 lenders across the European Union, soon plans to ask Brussels to ensure that trading and banking services flow smoothly in both directions across the Channel, echoing appeals from the City of London.
The approach aligns European banks with Wall Street and London rivals, which want the ability to keep major operations in London and avoid having to shift more resources and staff across the continent. The heart of the conflict is the policy called “equivalence” that will give U.K. firms access to the single market -- and that the EU can withdraw unilaterally at short notice.
“Even within the EU there is a recognition that something that is political, that can be withdrawn on short notice, that pretends to be technical but actually gets caught up in much bigger questions, is actually a very difficult basis on which business can operate,” Stephen Jones, chief executive officer of U.K. Finance, told the U.K. parliament on Wednesday.
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U.K. Finance is a member of the banking federation, and Jones said that there is near unanimity on the association’s board for revamping the equivalence system.
Raymond Frenken, an EBF spokesman, confirmed that the group is working on a paper on how equivalence can be used “to avoid fragmentation in European financial markets.”
Big international banks are stepping up calls on both the U.K. and EU to ensure cross-border access and to emphasize the importance of granting equivalence for London markets. The City of London has been home to Wall Street banks’ European hubs for decades, and the U.K. capital is the center of the $6.6 trillion-per-day currency market and the quadrillion dollar swaps market.
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