Bank watchdog to relocate if Britain quits EU

 A campaigner for Vote Leave holds a placard during a rally for Britain Stronger in Europe ahead of the the forthcoming EU referendum, in Hyde Park in London on June 19.
A campaigner for Vote Leave holds a placard during a rally for Britain Stronger in Europe ahead of the the forthcoming EU referendum, in Hyde Park in London on June 19. PHOTO: AFP

BERLIN • The European Union's banking watchdog will move from London to another European capital if Britain decides to quit the bloc in a referendum this week, its chairman said in an interview published yesterday.

The London-based European Banking Authority (EBA) - founded in 2011 as a reaction to the global financial crisis - operates as a pan-EU regulator, writing and coordinating banking rules across the bloc.

"If the British should decide to leave the EU, we actually would have to move to another European capital," Mr Andrea Enria, the head of the EBA, told German newspaper Welt am Sonntag.

Britain votes on Thursday on whether to stay in the 28-member bloc, a choice with far-reaching consequences for politics, the economy, defence and diplomacy on the continent.

The EBA is currently working on an EU rulebook aimed at ensuring a level playing field for all banks across the bloc's capital market.

"This work needs to be completed irrespective of the result of the referendum," said Mr Enria, an Italian national. "We must ensure that there are no different rules between the countries that have the euro and those that do not have it."

Mr Enria said the European banking sector is more stable now than it was five years ago, but there is still a need for consolidation.

"If you look at the balance sheets of banks, you could actually ask yourself whether such low profitability and such low return on investment are sustainable in the long term," he said.

Banks should speed up their efforts to deal with non-performing loans and change their internal business culture in order to avoid future scandals and fines, Mr Enria said.

That banks have hardly made any progress in these two areas is the reason why the European Central Bank is struggling to boost lending and generate more growth despite its bond-purchase programme, he added.

REUTERS

A version of this article appeared in the print edition of The Straits Times on June 20, 2016, with the headline 'Bank watchdog to relocate if Britain quits EU'. Print Edition | Subscribe