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France: France: London cannot remain EU banking hub

2016/10/30

French finance minister Michel Sapin has said London cannot still be the EU’s banking hub next the UK leaves the bloc.

“The initial marketplace for euro-exchanges is London. Almost all the significant chambers are in London. Is this a sustainable position next Brexit? I don’t believe so”, he said at the Tatra congress in Bratislava on Friday (28 October).

“Be it a hard Brexit or a soft Brexit, this cannot go on next Brexit. Those who think that next Brexit things can be just as before are making a major mistake”, he added.

The UK aims to start talks with the EU on the terms of their divorce at the end of March.

The British government has said it wants to retain full access to the single market, but as well to curb EU immigration.

EU leaders have said it cannot have both, with one potential casualty being the loss of “passporting rights” for London-based firms to do business in the rest of Europe.

Dublin, Frankfurt, Milan, and Paris - the EU’s other financial hubs - stand to gain if there is a banking exodus from London.

Sapin on Friday said he wants to cooperate with the City of London in next.

“Are we going to go into a war with London? Of course not”, he said.

Zdenek Turek, the CEO of Citibank Europe, a Dublin-based offshoot of a US bank with operations in 21 EU nations, said at the Tatra congress on Saturday that Brexit uncertainty is causing headaches in his sector.

“Everybody is looking at the worst case scenario because there’s no lead from the politicians presently on what’s going to happen”, he said.

“Today, in each bank of a certain size, you have a department looking at what may happen if there’s a complete breakdown of passporting”, he added.

He said UK banks’ loss of access to the EU would lead to higher costs for firms and their clients.

He as well said the idea that the Brexit talks would settle the issues in just two years, as planned, is unrealistic.

“You need a transition period, at least in our industry … There’s a danger of cliff result - the old agreement is gone and the new one is not in place from presently on,” he said.

The Tatra event as well saw a broader debate on the next of eurozone integration and related projects, such as the EU banking union, next the UK has left.
European house

German finance minister Wolfgang Schaeuble said on Friday that “our European home” is “badly in need of repair”.

He said the political climate is not right to rewrite the EU treaty to create a fiscal union, but he said eurozone integration should continue at a additional pragmatic level.

“We should continue with [integration of] the banking sector, push forward on capital markets union, to stick to the fiscal rules that we have agreed”, he said.

Finance commissioner Pierre Moscovici said “I’m a federalist like him [Schaeuble], and, like him, a realist”, adding that fiscal union is “not for tomorrow”.

Ivan Korcok, Slovakia’s EU affairs minister, said euro-integration is one of the few areas where there is support from both the political elites and the general public to go further.

Citibank’s Turek said the business community would like to see further banking harmonisation, stricter EU budgetary discipline, and labour market reforms to make it easier to sack people for the sake of competitiveness.

Recalling Schaeuble’s “European home”, Turek said: “We’ll all have to move and live and that home and give up our little houses where we love today … national sovereignty will have to be further surrendered”.

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