The consequences of the Brexit referendum are forcing UK-based banks to reconsider their European operating models. Some banks are strengthening their European presence to ensure client service and business operation, even if potential results of the negotiations on Brexit are still rather unclear. It seems likely, however, that today’s simplified market access (european passport) will not persist. In March 2019 the formal validity of the current regulations ceases. Therefore, it is necessary now to begin with the preparations – even if only starting with a transitional model (step1-model).
Depending on the type and volume of the business in Europe and the existing organizational units, individual solutions are required.
An assessment of the licensing requirements of a local unit is required, if business contracted out of that entity will change driven by Brexit.
It is very likely that client-related activities will be affected by the Brexit-changes. The significance of this change is depending on the width of the product catalog, scope of the activity and the customer’s domicile. This will require an individual assessment for each local entity.
As a result, further licensing activities may be required or even a suitable local entity is to be established.
The establishment of a new subsidiary involves a wide range of questions concerning the organization, technical equipment and the potential migration of the current business with the EU-customers.
In both cases – extension of the license or the establishment of a new entity – there are not only additional, but also Germany-specific requirements in the area of accounting and regulatory reporting.