British banks stand firm as EU plans tighter financial rules

Brexit: NI protocol issue could negatively affect Irish economy

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Insiders at UK Finance, which represents the banking industry to the Government, have claimed a new expanded capital markets team will call for unnecessary red tape to be cut and will push back on certain EU proposals which could harm UK banks, the Telegraph reports. Speaking to a spokesperson for UK Finance confirmed the group was mostly interested in opportunities to overhaul the UK’s regulatory regime post-Brexit. When the UK left the EU large amounts of the EU’s regulatory scheme were essentially copied and pasted across however the door is now open to make various changes to this. They added: “Now we have left the EU, the UK is going through a process of evolving its regulatory regime.

“This is something UK Finance will be closely involved with on behalf of our members.

“As a result, we are investing in our capital markets offering to ensure we can best represent our members in this area.”

Last week the Treasury described the opportunities for reforming financial regulation as “once in a generation” as Rishi Sunak unveiled further plans aimed at boosting competitiveness.

The Chancellor’s new framework for financial regulation is the latest in a number of reviews to begin given the greater freedoms post-Brexit.

Of particular interest to UK Finance is a review of secondary capital raising which will look at ways to make it easier for company’s to raise revenue such as by selling new shares after the company has already gone public.

The group are also interested in the Wholesale Markets Review which the Treasury have described as an opportunity to “tailor our rules more closely to the unique circumstances of the UK, improve standards and make regulation more proportionate.”

Other potential areas the UK could become more competitive are proposed changes to Solvency 2 regulations which currently govern the ability of the insurance industry to make investments.

The Association of British Insurers predict reform could free up billions of pounds of investment for green infrastructure projects.

Venture capital has also been cited as a potential beneficiary for regulatory change by reducing fees and allowing public investment in capital venture funds.

Meanwhile Brussels is currently considering proposals that could have major impacts on non-EU banks.

The European Commission is working on plans to force non-EU bank branches operating in the bloc to become subsidiaries which would increase regulation on them and potentially cost the industry billions.

The Association of Financial Markets in Europe commented: ““It would not be appropriate to require subsidiarisation without a full understanding of the reasons for doing so and whether it was likely to result in adverse effects for customers and financial stability more widely”.

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The changes would be problematic for all non-EU banks as well as just UK based firms.

An executive of one large US bank told the Financial Times he was “concerned about being caught by a proposal that was to address bad apples and becoming collateral damage”.

Another said that even if it was unlikely that his bank’s branches would be turned into subsidiaries, it could still change the way the bank operated because it would have to be prepared for the possibility.

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