Brexit: Banks in Britain seek time under EU law

LONDON • Large banks in Britain want the British government to allow their industry to remain subject to European Union laws for up to five years after Brexit, a move likely to enrage Eurosceptics who want to break away from the bloc's legal system as soon as possible.

The banks, international players, are also pressing the government to allow the European Court of Justice to rule on decisions related to their businesses during that period, according to a document reviewed by Reuters.

The document was drawn up by law firms on behalf of banks lobbying the government for a departure in stages from the EU. It has the support of major banks, has been shared with the Treasury and is the most detailed request yet by Britain's financial industry for a transitional period to give it a longer time to adapt to Brexit, bankers said.

The Treasury declined to comment on the document.

The British government is currently divided on whether to support demands for transitional arrangements - and if so, in what form - reflecting diverging views about the best way to leave the EU and concerns about a backlash from those who campaigned and voted for Brexit.

FACE UP TO IT

This is nonsense. It is just the banks, frankly, not dealing with the issue. The country voted for change and the sooner they wake up and accept it the better.

MR RICHARD TICE, co-chairman of the Leave Means Leave campaign, which is pushing for a so-called "hard Brexit".

The document warns of the potential shock to the British and European economy from a loss of critical financial services if banks do not secure a transition phase beyond the two-year withdrawal period that will begin when the government invokes Article 50 of the EU's Lisbon Treaty.

If no transition deal is agreed, there is a risk that some banks may not be able to move parts of their operations out of Britain or set up new British subsidiaries in time, the document says, running the risk that the banks may have to halt their EU business activities abruptly.

It would normally take banks as long as three years to relocate operations, according to the document, but due to the large number of firms seeking to do this simultaneously, regulators may be flooded with requests, slowing down the process.

"Transitional arrangements are likely essential," the document says. "This is important in order to avoid potential damage to the 'real economy' that is reliant upon uninterrupted access to financial services."

Hardline supporters of Brexit are opposed to any transitional arrangement, worrying that it could become permanent as final trading terms can take years to agree.

Mr Richard Tice, co-chairman of the Leave Means Leave campaign, which is pushing for a so-called "hard Brexit", where Britain leaves the EU's single market in order to impose controls on immigration, said the banks are exaggerating the potential disruption.

"This is nonsense. It is just the banks, frankly, not dealing with the issue," he said.

"The country voted for change and the sooner they wake up and accept it the better."

REUTERS

A version of this article appeared in the print edition of The Straits Times on December 10, 2016, with the headline 'Brexit: Banks in Britain seek time under EU law'. Print Edition | Subscribe