The Bank of England has suggested that it will allow EU banks with branches in the UK to continue to be able to trade in the UK even if reciprocal ‘passporting’ rights are not agreed as part of the Brexit negotiations.
This means that rather than setting up separate UK bank subsidiaries, securing UK banking licences and establishing new capital reserves in the UK, they could continue merely as a branch only of the EU bank authorised in Germany, Spain, Italy, France or wherever.
The Pros
The Cons
Why propose this now?
We guess the Bank of England and the Treasury are trying to push for a single market in financial services to protect London and protect jobs. In addition, its an opening gambit on a future possible trade deal between the UK and EU.