Banks could face six-month wait for EU relocation licence, ECB warns
The European Central Bank has cautioned banking groups looking to shift operations to the EU after Brexit that licensing decisions will require a six-month wait.
It came as part of fresh guidance from the central bank, which has been fielding questions from financial services about setting up shop in the EU after the UK leaves the bloc.
The ECB said the licensing decisions must be made within a year, but could take half that time.
"It usually takes six months from the applicant providing a complete application for a decision to be taken regarding a licence application."
Still, the central bank warned that the process could take more or less time depending on the "complexity", "completeness", and "quality" of the application.
"You should plan accordingly, in order to be sure to obtain your licence on time," the ECB said.
The time frame is likely to be welcomed by banks which have been working on Brexit contingency plans in hopes of securing a foothold in the EU after Britain scraps single market membership - a move which will subsequently see Britain lose passporting rights for financial services.
An approved EU licence would give banking groups permission to trade freely across the bloc.
But successful applicants will have to prove that their EU operations are "robust", with sufficient local infrastructure, staff and risk management in place.
"Establishing an 'empty shell' company would not be acceptable," the central bank warned.
The ECB said it would be happy to hold "preparatory discussions" with banks interested in "establishing or increasing their presence" in the euro area ahead of formal applications.
A number of banks and financial institutions have already released plans to shift operations from the UK to the EU, including insurance market Lloyd's of London, which announced last month that it had chosen Brussels as its new European base.
HSBC is on course to move 1,000 jobs from its London office to France, while insurance giant AIG said it would shift a string of executives from London to head up its own new EU site in Luxembourg.
However, the ECB stressed there was no regulatory benefit in choosing one EU city over another.
"The ECB is completely neutral regarding the location chosen and ensures consistent supervision throughout the euro area.
"All significant institutions are supervised directly by the ECB, using a single set of supervisory standards, irrespective of the country in which they are located."
The central bank said it will be holding a "technical workshop" for interested banks on May 4 in Frankfurt.