Banks should prepare for the possibility of a no deal in post-Brexit trade talks between Britain and the European Union, the Bank of England said on Wednesday.
The UK left the EU in January but is covered by a transition period that is due to end on 31 December. Talks on a future trading relationship between Britain and the EU entered a fourth round this week.
“It is fundamental to the Bank of England’s remit that it prepares the UK financial system for all risks that it might face,” the BoE said in a statement.
Andrew Bailey, the BoE governor, held a conference call on Tuesday with Britain’s biggest banks in which he emphasised the need to step up their plans for a no-deal Brexit, Sky News reported earlier on Wednesday.
The BoE said it meets the leadership of UK banks on a very regular basis.
“As we have said previously, the possibility that negotiations between the UK and EU over a future trading relationship might not conclude in a deal is one of a number of outcomes that UK banks need to prepare for over the coming months,” the BoE said.
Barclays and RBS declined to comment. HSBC and Lloyds were not immediately available for comment.
Britain wants binding commitments from the EU on financial market access to avoid the country’s finance industry suddenly being cut off from the bloc, which is a major export market for British financial services.
But the EU has said that British banks, insurers and asset managers face the limited kind of access given by the bloc to the United States, Japan and Singapore.
Senior sources at two major banks told Reuters they had been preparing for a long time to cope with a no-deal Brexit from an operational perspective, after relocating UK-based staff and management to new offices in the EU.
Britain’s financial services minister John Glen said on Wednesday that the country’s financial services industry was “world class” and was ready for whatever Brexit outcome.
“I continue to believe that we are still well placed as a sector, whatever the specific outcomes are of negotiations ahead of us in the second half of this year,” he said in a webinar.
Britain still expects to secure a comprehensive free trade agreement with the EU, Glen said.
A senior EU official said last week that Britain’s financial services sector should be ready for a no-deal Brexit.