BOE Woods, Cunliffe Stress Brexit Transition Wasting Asset

By David Robinson

     LONDON (MNI) - Senior Bank of England official Sam Woods and Jon Cunliffe

told a parliamentary committee Wednesday that a Brexit transition deal would

become less and less beneficial as time goes by, with a swathe of Brexit

transition work set to kick-in in the new year.

     Woods, Chief Executive Officer of the Prudential Regulation Authority, said

that authorising a firm to conduct financial business typically takes 12 to 18

months, so by early next year the regulators would have to crack on with

arrangements for European business post-Brexit.

     "If we get to around the new year and there hasn't been a clear political

announcement from both sides on a transition (then) for purely operational

reasons we would need to get going on all that sort of work," Woods told the

House of Lords EU Financial Affairs Sub-Committee.

     Woods, who also sits on the BOE Financial Policy Committee, stressed that

from a financial stability perspective they could not afford to sit around and

see what materializes on Brexit.

     He was asked when it would be best to conclude a Brexit transition deal,

which would allow for a period beyond March 2019 when financial sector firms

could operate under existing arrangements.

     "I would say the sooner the better. I agree with the view that has been

offered by the Chancellor and a few others that this (a transition deal) is a

wasting asset and becomes worth less through time," he said.

     The value of a transition deal will never reach zero before March 2019, but

firms will have to implement more and more of their contingency plans the later

the deal arrives.

     "If the transition period was not agreed soon but was on offer much later

in the process it would still have some value but less than it has now," Woods

said.

     BOE Deputy Governor Jon Cunliffe said "The longer you leave a commitment to

a transition ... the more firms will have to do. A lot of them have made their

preparations, chosen their options and decided where they want to go but they

haven't yet invested in all the permissions and the people."

     "They have taken options on the offices. The longer you leave that the

harder it is to put it into reverse," Cunliffe added.

     Cunliffe said financial firms would need legal certainty over a transition

period and that from a financial stability perspective "you can't wait." 

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

--MNI London Bureau; +44 203-586-2226; email: jamie.satchithanantham@marketnews.com

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