European regulators have ordered eight banks to relocate staff from London as part of a Brussels takeover.
The European Central Bank (ECB) said it had identified 56 groups of traders who should do their job within the European Union, after a long investigation into whether the institution was trying to circumvent the Brexit rules.
In its desk mapping study, the ECB examined 264 UK-based sales departments and found that about a fifth of them should not be located in the United Kingdom.
He now warns against “targeted control” against banks she did not name to order them to move jobs to Paris, Frankfurt and Dublin.
European rivals have repeatedly tried to attract workers from London after the Brexit referendum, but the number of professionals leaving the City was much smaller than originally expected.
EY consultants estimate that around 7,000 roles have moved abroad since 2016, up to 200,000 job losses were forecast before the vote. In the UK, about 1.1 million people work in financial services.
The ECB has already told banks that they must have staff in the EU if they are responsible for significant business on the continent. However, he fears that many companies use the “brass plaques” of the European office with little or no staff to meet its requirements.
Andrea Enria, Chairman of the Supervisory Board of the ECB in Frankfurt, said: “The ECB is moving in uncharted waters.
“No major supervisory authority has ever had to anticipate the integration of a significant number of new entrants with global market activities that belong to groups based in third countries within their supervisory powers in a short period of time.
Industry insiders say the Covid pandemic and subsequent locks have postponed requests to move more overseas staff, although it remains to be seen whether this could change in the future as public health concerns subside.
The desk-mapping inspection, launched in 2020, was a direct response to Brexit.
Under the terms of the UK’s withdrawal from the EU, British-based banks have lost access to a “passport” – the right of bloc-based companies to trade freely in the European single market.
As a result, the ECB audited banks primarily based in London that had subsidiaries in the European market to ensure that these companies had “adequate risk management and control capabilities,” Mr Enria said.
The review found that 70 per cent of counters surveyed used “follow-on” reservation models, where banks move risk back to the UK by doing business in a single jurisdiction but then book a parallel transaction in London – a move criticized for essentially shifting responsibility. for shops in the city.
Meanwhile, about 20 per cent of the counters were organized as split counters, which simply meant that EU clients or assets were treated together across offices in the UK and the continent.
In light of these measures, Mr Enria said that “banks do not yet maintain full control over their balance sheets” and therefore do not yet meet the ECB’s expectations.
Mr Enria said: “A review of the sales departments and their associated risks does not mean the end of the ECB’s oversight of the inbound banks’ operating models after Brexit.
“Investigations into credit risk transfer techniques, reliance on parent companies for liquidity and financing, and approval of internal models are still ongoing.”