Interview by Boersen-Zeitung with Andreas Krautscheid
13 November 2018
On 29 March 2019, the UK will become an EU third country. What challenges does this pose for German banks?
Let me give you a few examples: German banks will have to check whether the legal status of units operating out of London needs to be changed. They’ll have to think about which business with clients in the EU they need to move from London to Germany because it can no longer be offered from the UK as a third country. They’ll have to adapt contracts for existing business and review collateral management, choice of venue clauses and other contract terms.
What do you think the European Commission could do to facilitate cross-border business for banks after Brexit?
The Association of German Banks calls for full recognition of existing equivalence rules for the UK – and for not waiting until the end of March or later to issue a statement to this effect. This would make life easier for market participants, at least where business already covered today by equivalence is concerned.
Would this fully replace the EU passport?
No, equivalence is no substitute for the EU passport. But a reliable equivalence regime could make it much easier for British and European banks to provide cross-border financial services.
You emphasize “reliable” – so do you think the current equivalence regime needs to be improved?
Yes. The European Commission can, for example, withdraw recognition of equivalence within 30 days. No bank can build up long-term business on this basis.
What do you suggest instead?
Where there is a discrepancy between EU and third-country law, the European Commission should no longer be allowed to withdraw recognition of equivalence within 30 days but should give the third country 180 days to correct this discrepancy.