ECB says banks dragging feet on no-deal Brexit homework

FRANKFURT AM MAIN: Lenders have fallen behind in preparations for a possible no-deal Brexit and must pick up the pace, the European Central Bank warned on Wednesday, as the rhetoric over a possible chaotic departure escalated in London.

“So far, banks have transferred significantly fewer activities, critical functions and staff to euro area entities than originally foreseen as part of their plans for Brexit Day 1,” the ECB said in a monthly newsletter. The eurozone’s top supervisor “now expects banks to speed up the implementation of their plans,” it added.

Charged with keeping an eye on 119 of the biggest and most important banks in the single currency bloc since 2014, the ECB has long urged financial firms to get their houses in order before Brexit.

Banks had to submit plans “in particular regarding the build-up of local risk management capabilities and governance structures” in the eurozone to be able to continue serving eurozone clients with the supervisor’s blessing.

Solely UK-based banks would no longer be allowed to offer their services in the bloc after a no-deal exit. To avoid firms setting up so-called “empty shell” units on the continent controlled from London, the ECB has insisted banks set up a meaningful presence within the eurozone including assets and decision-making staff.