(MENAFN- The Peninsula)
London: The UK is trying to kill a planned European Union rule for foreign banks that will become crucial for its own lenders after Brexit.
Teaming up with Luxembourg, a host for many foreign banks' EU units, London declared its opposition to plans to force banks from outside the bloc to consolidate their activities under a single entity. That plan would only boost costs and complicate structures without helping supervision and resolution.
The European Commission, the bloc's executive body, would require banks from abroad to set up an 'intermediate parent undertaking to head their businesses within the bloc. The aim is to ease resolution by having a company with its own capital and loss-absorbing debt available to fund its own demise should disaster strike, according to the commission.
UK banks could be among those for which this is required after Brexit, depending on the outcome of the British negotiations with the bloc. Government officials fear they could be left out of the main Brexit talks as it could be too difficult to reach a deal in the two-year time frame for talks. 'We do not share that assessment, the UK and Luxembourg said about the EU's rationale for the requirement. 'We believe that compulsorily requiring all subsidiaries beneath an IPU would needlessly add to costs and complexity without enhancing the effectiveness of resolution strategies.
The commission made the proposal as part of its review of the EU's banking regulation. The rule would affect companies with assets of more than €30bn ($32bn) in subsidiaries and branches throughout the region, and units of global systemically important firms.
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