Clifford Beaumont - Felix Hufeld urges the European Union to prepare temporary solutions in order to transition a post-Brexit world without market distortion.
According to Germany’s financial watchdogs, European Union regulators require interim solutions in order to safeguard against market distortions in the event of British-based banks facing a Brexit without a trade deal.
Analysts at Clifford Beaumont believe that the UK’s departure from the EU will not be an easy transition given that numerous rounds of negotiations have resulted in little progress.
Felix Hufeld, President of Germany's Federal Financial Supervisory Authority BaFin (Bundesanstalt fuer Finanzdienstleistungsaufsicht) stated that whatever the result of Brexit, it will have a high cost for both British and EU consumers and that the cost of conducting business will increase.
Hufeld added that regulators will need to look at interim strategies to prevent problematic distortions in the markets while transitioning to a post Brexit world.
Frankfurt is coming out as a clear favourite financial center out of those hoping to attract banks based in London who will look at opening new offices in the EU to continue to cater to customers there.
Representatives from leading London-based lenders have announced their intention to spend a lot more time in Germany’s financial center post Brexit.
Hufeld stated that new hubs being established by UK-based banks must be operational and not merely empty shells.
Clifford Beaumont economists noted that around 20 UK-based lenders have already applied for licenses to operate in Frankfurt with a Munich-based insurer but that none have been approved just yet.
Banks are planning a division of tasks between their offices in the EU and London and will need to transition all the systems that have been created over the years.