Update BOE: Banks Can Seek Post-Brexit Authorisation From Jan>

     London (MNI) - The Bank of England sought to get the ball rolling  

on authorisation of overseas banks and insurers post-Brexit, stating    

that they can apply for authorisation from January next year.           

     Firms have repeatedly said that time is fast running out before    

they have to trigger contingency plans and the BOE's move is a pitch to 

try and ensure overseas financial service firms will register to carry  

on business here once the UK leaves the EU.                             

     With the negotiations with the EU over Brexit ongoing, financial   

sector firms have no legal certainty but the BOE said that they could   

plan on the basis that there will be cooperation between EU and UK      

regulators and regulatory equivalence.                                  

     There was an agreement this month between the UK and the EU on the 

need to negotiate an implementation period during which firms could     

carry on cross-border activities.                                       

     BOE Deputy Governor Sam Woods said in letter to financial sector   

firms' CEO's that "We ... expect those negotations to progress early in 

the New Year. In the meantime, firms may submit applications for        

authorisation from January, and we will then review timelines and       

assumptions as the political process moves forward."                    

     The clear message is that the BOE and its regulatory arm, the      

Prudential Regulation Authority, want to get the authorisation process  

moving despite the uncertainty over the final shape of any deal between 

the UK and the EU. Around 200 firms could apply for authorisation.      

     The BOE/PRA approach is based on the assumption that EU banks and  

insurers will able to operate as branches of their home country firms,  

rather than having to subsidiarise and assign additional capital to     

their UK branches.                                                      

     This approach to authorisation relies in part on the assumption    

that there will be regulatory equivalence between the UK and the EU.    

     "It is ... premature for the PRA to reach a final view in these    

areas ... However, given progress to date in the Brexit negotiations,   

for the present firms may plan on the assumption that these requirements 

will be met," Woods said.                                               

     In evidence to the Treasury Select Committee shortly after the BOE 

issued its authorisation proposals, BOE Governor Mark Carney and Woods  

highlighted the sheer volume of work that the Bank was going to have to 

get through to authorise EU banks and insurers.                         

     "We haven't done anything on this scale," Carney said, noting that 

it takes around 12 months for a single firm to get authorisation.       

     He said a transition period, following the envisaged March 2019    

departure of the UK from the EU, would be immensely helpful.            

     Woods said that some 45 BOE staff were working solely on the issue 

of post Brexit authorisation of firms. Another 50 odd staff were        

assisting them.                                                         

     Carney defended the Bank's optimism that there was likely to be a  

regulatory deal between the UK and the EU.                              

     "Now is not the time to say: glass half empty, subsidiarise, we are 

never going to get a deal," Carney said.                                

     If, however, no deal is forthcoming then the BOE would likely do  

an about turn and force banks to set up their UK arms as subsidiaries.  

e-mail: david.robinson@marketnews.com                                   

[TOPICS:M$$BES]