Topic Authorisation, Authorisation requirements Brexit
Article from the Annual Report 2016 of the BaFin
On 23 June 2016, the citizens of the United Kingdom voted in a referendum, which returned a slim majority in favour of leaving the European Union (EU). Although the Brexit vote caused significant price and exchange rate fluctuations on the following day, calm quickly returned to the markets. The longer-term economic impact of Brexit on trade links with Continental Europe will depend on the upcoming exit negotiations.
A large number of companies under UK supervision – including many subsidiaries of major non-European banks – are using the European passporting rights to offer banking and other financial services in other EU member states. At the end of 2016, approximately 140 UK companies from all supervised financial sectors conducted their business through a branch in Germany. An even larger number provide cross-border services, with over 2,700 companies using the services passport. Depending on the type of Brexit deal, the passporting rights may no longer be available in future, prompting the affected companies to consider relocating their registered offices to other financial centres within the European Union.
BaFin is ready to deal with queries in this regard and is also actively approaching interested undertakings, for example, by offering workshops (see info box) or individual consultations. As the German Supervisory Authority, it aims to offer the undertakings clarity and support, as well as a reliable framework that allows them to provide financial services even under the new political conditions.
Brexit workshop with foreign banks
Acting on the initiative of President Felix Hufeld, BaFin invited around 50 representatives of foreign banks to a workshop held in Frankfurt on 30 January 2017 to exchange views on supervisory issues relating to Brexit. The event focused on topics such as risk management, compliance, outsourcing, internal models, rules for large exposures, recovery planning and authorisation proceedings under the German Banking Act (Kreditwesengesetz).
Department head Dr Peter Lutz said after the discussions: "For us as committed Europeans, Brexit is not a reason to celebrate. But we have to be pragmatic now and give institutions the supervisory clarity they need in taking their strategic decisions." BaFin was doing this, he said, to provide a reliable basis for the activities of companies wishing to relocate their business to Germany as well as to ensure that no threats arise for the German financial sector. In this respect, he saw a special role for BaFin as the integrated German financial supervisor, since it monitors the whole of the financial market. BaFin will continue to make itself available for future consultations.
To this end, BaFin provides the relevant information on its website. A special e-mail address (access@bafin.de) and a contact form have also been set up. All communication may be conducted in English. BaFin will respond to all queries within two working days and guarantees that issues will be processed quickly and efficiently.
