Another little piece of FUD dies a quiet death

[Suff]

I has long been trumpeted that the UK banks will have to leave the UK and go to the EU in order to operate our financial services.

Except that Bloomberg seems to be saying, today, that the EU itself is denying that.

The Commission, those wonderful people who put Barnier in as the negotiator, are saying that the EU won't be cut off from £41 Trillion of finance if we bang out with a Hard Brexit because of a thing called "equivalence".

What is Equivalence? It is where a 3rd country (non EU or EEA), applies the same, or similar, banking rules to the EU in order to operate banking services to the EU from their own country.

According to the European Commission, equivalence clauses are made for the mutual benefit of both EU and third country financial markets and institutions. As underlined in the recitals of the relevant legislative acts, equivalence clauses support three objectives:  they reduce or even eliminate overlaps in regulatory compliance for the EU and/or the third-country entities concerned,  they lead to considering certain services / products / activities of third countries’ firms as compliant with various objectives of the EU regulatory framework,
 they allow to apply a less burdensome prudential regime in relation to EU financial institutions’ exposures to an equivalent third country.
Equivalence is therefore often conditional on reciprocity by the third-country

Erm, right. So the UK has EXACTLY THE SAME LAWS AS THE EU for Banking. So why would we be told, for 3 solid years, that if we left the EU it would be totally and completely impossible for our banks to provide financial services to the EU.

Ah, yes, it's up to the Commission. If they say NO then it's NO and that is the end of it. Or is it? Because it seems to me that the member states of the EU have had a little word in the shellike of the Commission and advised them that under no uncertain terms are the Commission to block them from £42 trillion of financing. Of "words will be had"...

Just another little fearmongering story biting the dust of reality.

[Workingman]

Bloomberg is talking about clearing, not all products and services.

The Brussels-based commission would only ensure clearing access on a temporary basis to “address financial stability risks arising from an exit without a deal,” commission spokesman Johannes Bahrke said by email on Tuesday. Any short-term fix would be based on the EU’s so-called equivalence rules, which can allow firms outside the bloc to provide services to the single market, he said.

However, there appears to be conflation of "passporting" and "equivalence".

The banking passport allows banks to provide banking services throughout the EU, either directly from their home country or via branches established in another Member State that do not require the authorization of the host Member States. Under the EU passport regime, there is no need to open a fully-fledged local subsidiary to provide banking services in another Member State. Subsidiaries are separate legal entities subject to host country licensing and supervision that have to meet capital requirements on a solo basis. Using passporting rights to operate branches is more time and cost effective. EU Member States have full access to the Single Market and benefit from all passporting rights. Beyond the EU, passporting rights are only available to members of the European Economic Area

To date, there is no precedent of passporting rights without full membership of the EU or acceptance of all relevant EU rules and regulations (EEA model). The EU passport as such is not available to financial institutions established in “third-countries” (i.e. a country not being part of the EU or the EEA).

Once we Brexit we will lose our passporting rights and this where the bank job losses story emanates from.

However third countries are entitled to ask for the so-called “equivalence” treatment by the EU. As opposed to the EU passport, the concept of third country equivalence is a much more piecemeal approach. Equivalence can only be requested by third countries where it is explicitly provided for in EU legislation (since it is not available with respect to the provision of all services, or the servicing of all client types). Equivalence provisions are tailored to the needs of each specific act and their meaning varies from one legal text to another. Equivalence is assessed by the Commission. Theoretically equivalence can be withdrawn at any time (although there is no precedent so far).

Equivalence is therefore often conditional on reciprocity by the third-country. For businesses and countries not governed by an equivalence regime, third country institutions or service providers must file for authorisation by the competent supervisor in each Member State where they plan to operate.

A slightly different spin.

Yes, we use the same rules and regulations, but let us not delude ourselves; once we Brexit we become a third country, with all that entails. The danger is that if we get a no-deal Brexit that will indicate friction between the two sides and the good will to work together might well be at a premium.

[Suff]

It will also endanger £1.6tn worth of EU borrowing. They can't move the markets fast enough to deliver by March 29th. So they have to do something to assure the supply.

We didn't force them to bank in the UK. We just made it cheaper and easier to do so. They made a choice.

The point is I was saying all along that there were plenty of banks around the world doing both banking and clearing in the EU whilst being 3rd country banks. They did this via the Equivalence rules.

Both Remain and the EU denied this and have continued to deny this until it became almost certain that the EU are not going to get what they want and that the UK is almost certain to bang out with No Deal if the EU don't move.

Suddenly Equivalence is an option.

The reporter may have conflated things but the EU are not. The mechanism exists to allow the banks, based in the UK, to continue operating from the UK post Brexit, deal or no deal. The EU just denied it. Now it is expedient to confirm it.

I don't like those kinds of political lies which is why I wanted the UK out of the EU. Because the EU is full of them.