Jon Holt, Incoming Head of Financial Services, KPMG UK shares his insights on banks’ responses to the PRA’s request for Brexit business plans:
“Most of the plans landing in the regulator’s inbox are an outline of options rather than a concrete course of action but, from our discussions, there are two messages coming through loud and clear: an answer on whether there will be a transitionary arrangement is needed before year-end, and for some banks, especially the smaller ones, it simply doesn’t make sense to split their balance sheet in two.
“The finance sector has been calling for a transitionary period but we still have no confirmation and we’re reaching make-or-break point. If there is no agreement with the EU to extend the status-quo for several years past March 2019, firms need to take action or face a cliff-edge. In some cases getting a licence to operate overseas is taking teams of around 40 people almost five months. With that in mind, the application process will have to start in the first half of 2018 which means decisions need to be made by the end of 2017. If we reach December without certainty on this, I expect to see a lot of companies pushing the button on relocation.
“Several European regulators and the ECB have made it clear that relocation means moving capital; yet for all banks balance sheet optimisation is a challenge right now so splitting that balance sheet between multiple jurisdictions will come at a heavy cost. There seems to be a general assumption that financial services companies can afford Brexit, but the truth is for some it’s simply too expensive and these plans will likely make the PRA keenly aware of that.”
Notes to editor
For further information please contact:
M: 07789 504 905
KPMG Press Office
Tel: +44 (0) 207 694 8773
KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 13,500 partners and staff. The UK firm recorded a revenue of £2.07 billion in the year ended 30 September 2016. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 189,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
© 2021 KPMG LLP a UK limited liability partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
For more detail about the structure of the KPMG global organisation please visit https://home.kpmg/governance.