LONDON (Reuters) - Lloyds Banking Group (LLOY.L) aims to get its Berlin branch ready for business in Europe by the end of the year ahead of Britain leaving the European Union, according to a person with knowledge of the matter.
Lloyds this month filed an application with Germany’s financial regulators to convert its local branch into a subsidiary, the person said, which will enable it to keep its continental operations within the EU, unaffected by Brexit.
The move is more than a formality and will require Lloyds to inject capital into the business to underpin its activities.
The amount will depend on the ultimate size of the Berlin business but is expected to be in the low hundreds of millions of pounds, the person said, representing less than 1 percent of the bank’s overall capital.
Banks are taking steps to ensure their European operations can continue to sell across Europe should Britain leave the EU without a trade deal.
IG Group Holdings, a British online financial trading company, said on Tuesday it plans to create a subsidiary in Dusseldorf.
While banks are acting now, large-scale staff moves will likely come only later. In Lloyds’ case, the Berlin outpost is set to remain small. It currently employs about 300 staff and that is expected to rise by just a handful.
Reuters reported last February that Lloyds, Britain’s largest mortgage lender, was examining steps to turn its branch in the German capital into a subsidiary. It is the only major British retail lender without a subsidiary in another EU country.
Frankfurt has been the preferred base for U.S. banks preparing for EU trading after Brexit, with Morgan Stanley, Citi and JPMorgan so far choosing the city which hosts the European Central Bank.
For Lloyds, Berlin’s appeal is that it already has the bank’s main European branch with a full management team in place, including the finance, risk and human resources staff.
The bank is still expecting to transfer only a handful of jobs to the new subsidiary, the person said.
Reporting By Lawrence White and Emma Rumney; Editing by Hugh Lawson