FRANKFURT (Reuters) - UK banks are significantly behind schedule in moving staff to the European Union ahead of Brexit and risk being caught off guard if Britain leaves without a deal, the European Central Bank said on Wednesday.
Many London-based banks are having to expand their EU operations to continue doing business in the bloc after Brexit, under plans agreed with the ECB.
But the euro zone’s top banking watchdog warned on Wednesday they were falling short.
“So far, banks have transferred significantly fewer activities, critical functions and staff to euro area entities than originally foreseen,” the ECB said. “The ECB now expects banks to speed up the implementation of their plans.”
Britain is heading towards a constitutional crisis at home and a showdown with the EU as Prime Minister Boris Johnson has vowed to leave the bloc in 78 days time without a deal unless it agrees to renegotiate a Brexit divorce.
The ECB said “contingency plans for a no-deal scenario” had to be fully implemented, including preparations for a situation in which UK assets are no longer covered by EU rules.
Among other areas where banks were coming up short, the ECB listed the practice of back-branching, i.e. serving EU clients from UK branches even when there is no local business need, remote booking of trades and back‑to‑back hedging.
Reporting by Francesco Canepa; Editing by Alexandra Hudson