The Bank of England (BoE) has unveiled a plan to allow European banks and insurance companies to keep their UK operations unchanged even after Brexit.
This means that the European banks will not have to establish costly subsidiaries in the UK and will also not be required to ring-fence their capital and liquidity in the UK.
Under the new plans, EU banks and insurers may have to re-apply for authorisation to operate as a branch in the UK.
Bank of England said that the foundation of its approach is the “presumption that there will continue to be a high degree of supervisory cooperation between the UK and the EU”.
“The UK’s financial system is both a national asset and global public good. Keeping the UK’s financial system open to foreign institutions is in the best interests of the UK, EU and global economies,” the Bank of England said in its statement.
The financial services sector accounts for 7% of output and is a source of over 1 million jobs, two thirds of which are outside London. It contributes around £70bn, or 11%, of annual tax revenues.
International banks operate 160 branches of in the UK, of which 77 are from the EEA. They hold of around £4 trillion. Also, there are also 110 branches of international insurers in the UK, of which 80 are from the EEA.