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Barclays Brexit blueprint revealed

Barclays Brexit blueprint revealed

(7 December 2018 – United Kingdom) Barclays plan to move European business to Dublin in preparation for Brexit is notably ambitious but welcomed by regulators.

The group plans to book almost half its EU trading risk within the bloc by the time the UK leaves - a level EU regulators consider other global banks should align with even if they haven't set specific goals. Barclays began shifting direct ownership of its French, German and Spanish branches from a British-based entity to its Irish bank in August 2018 ahead of Britain’s exit from the European Union in just four months. Barclays Bank Ireland will have total assets of £224 billion after absorbing all the European business out of £1.1 trillion for the entire bank as at the end of 2017.

Banks including Goldman Sachs and JPMorgan are still in talks with the ECB over the exact conditions they need to meet to increase EU operations. The ECB's expectations for the transfer of risk follow EU regulatory principles and will take account of the "materiality and complexity" of individual banks' capital markets businesses. The key challenge is the volume and speed at which banks need to move EU-denominated assets and staff to the bloc. Several firms had hoped to obtain the necessary authorisations by the middle of 2018 and are now increasingly frustrated.

With the March 2019 Brexit date approaching rapidly global banks that conduct much of their European business from London are bracing for the possibility there'll be no transition phase or other conditions to soften the blow to financial services. While many lenders have asked the European Central Bank (ECB) for new or expanded licences to maintain access to EU clients, the supervisor hasn't reacted as quickly as hoped. Barclays selected Dublin as the location for its EU unit and CEO Jes Staley stated in October that the Central Bank of Ireland had approved the bank’s expansion into the Irish market. That includes a plan to book 45 per cent of its assets, weighted for EU-related market risk, in the country by Brexit, the people familiar said. UK banks are reported to have the most to lose as Brexit negotiations drag on. London-based bank shares have fallen by 20 percent in 2018 and hit the lowest trading levels since September 2016 in November on the emergence of a potential “nightmare scenario.”

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