EBA Brexit Relocations Guide

On Oct. 12, EBA issued guidance on authorizing relocating Brexit firms.

  • For businesses seeking to establish or enhance EU27 presence for market access.
  • To provide greater certainty to firms and ultimately ensuring a level playing field.
  • Address policy on authorizations, prudential, and supervision of investment firms.
  • Using models, outsourcing, governance, risk transfer via back-to-back operations,
  • Consider impact of later resolution and how deposit guarantee schemes can cope.
  • EBA will monitor implementation, continue working on challenges following Brexit.
  • Principles
  • Apply the existing legal framework in a consistent and harmonious way across EU.
  • Avoid competition on regulatory or supervisory standards to attract new business.
  • Do not impose unnecessary rule burden on firms, but maintain existing standards.
  • Cooperation and coordination between supervisors, is important now and in future.
  • Authorisation Standards
  • Existing authorisation standards should not be lowered, apply ongoing standards .
  • Firms seeking authorisation should have rigorous assessment on the regulations.
  • Require clear explanation of choices firms are making on substance of new entity.
  • Empty shell companies should not be authorised, require local presence and staff
  • Minimize burden on firms by using existing information held and by cooperation.
  • Prudential Standards
  • Provision of investment services to be subject to adequate prudential supervision.
  • EU firms use a updated prudential framework per EBA report on investment firms.
  • Systemic investment firms established in euro-zone should be supervised by ECB.
  • Services by third country investment firms should also adequate prudential rules.
  • Resolution
  • Brexit may impact new resolution reform, or building up loss absorbing capacity.
  • Issuance of liabilities eligible for MREL, takes place in the UK under English laws.
  • Set under the minimum requirement for own funds and eligible liabilities (MREL).
  • Consider impact of UK departure for build-up of MREL, and take steps to mitigate.

Regulators ECB; EU EBA; UK PRA
Entity Types B/D; Bank
Reference EBA/Op/2017/12, PR, 10/12/2017,CRD/CRR, Dir 2013/36, Reg 575/2013, Brexit
Functions Financial; Reporting; Risk; Treasury
Countries European Union; United Kingdom; Cross-Border
Products Banking; Corporate
Regions EMEA
Rule Type Guidance
Rule Date 10/12/2017
Effective Date 10/12/2017
Rule Id 35469
Linked to N/A
Report Issue 10/15/2017
Report Section EU

Last substantive update on 10/13/2017