UK-based financial firms need to quickly wrap up their relocation to the European Union to be able to keep operating in the bloc, France’s central bank head said on Wednesday.
The EU and Britain are in the thick of tough negotiations over Britain’s post-Brexit trade relationship with the bloc after a transition period closes at the end the year.
Many UK-based financial firms have opened subsidiaries in the EU to retain unfettered market access known as “passporting”, but some still need to make preparations before Dec. 31.
“Even if there is a trade deal, which I do still wish and hope, Britain will have left the single market and hence things will change anyway significantly for financial services,” Bank of France Governor Francois Villeroy de Galhau said.
“It means that firms operating under the European passport must quickly finalise their relocation to the EU if they want to operate here as of next year,” Villeroy said at a financial conference in Paris.
French financial regulators had approved 43 firms as of September, and another 31, mainly investment firms, have applied for a French licence, Villeroy said.
Meanwhile, some 150 billion euros ($176.5 billion) in assets have been relocated to France, including those from French groups’ UK branches.
Nonetheless, a “handful of small firms” need to step up their preparations or risk being caught out in January, Villeroy said.
Meanwhile, the EU has given market participants an 18-month transition period after Dec. 31 to reduce their reliance on London-based clearing houses, which Villeroy described as “excessive”. “Considering the size and the concentration of some of these clearing services, betting on the status quo would be a losing proposition, including for clearing members,” he said.