European Central Bank Urges Banks to Proceed with Relocating UK Workers and Processes
The European Central Bank (ECB) is urging banks in the United Kingdom (UK) to prepare for a possible no-deal Brexit scenario by relocating UK workers and processes to the European Union (EU). Although the ECB believes risks to the overall EU financial stability should be manageable, it still expects banks to develop contingencies for all possibilities.
ECB Areas of Concern
The ECB notes several specific areas of concern that UK banks should address. These areas may present a number of issues that pose significant challenges for the UK banks, such as:
- Relocating UK workers
- Developing internal processes and systems
- Transferring clients
- Building local risk management capacities
- Creating local structures of governance
- Changing capital requirements
Need for Relocating UK Workers due to No-Deal Brexit Scenario
A no-deal Brexit scenario means EU law would no longer apply to the UK. On February 8, 2018, the European Commission Notice to Stakeholders noted several consequences in specific areas, such as:
- Authorization to provide banking, payment services, and electronic money issuing will cease
- UK entities will need to become authorized in the EU member states they operate in
- EU entities with branches in the UK must comply with their operation programs
- Arrangements and Exposures
- Autonomous risk management and control frameworks
- Treatment of exposures to UK third parties
- Continuity for contract relationships will lose the EU single passport
- EU rules on conflicts of law and jurisdictions no longer apply to the UK
UK Banks can Mitigate the Impact of a No-Deal Brexit by Relocating UK Workers
UK banks should be able to mitigate the impact of these consequences if they prepare accordingly. These banks should proceed with relocating UK workers to the EU member states where they have operations. Also, they should examine their internal processes and controls. This will help them ensure the impact of falling out of the EU will not hinder the banking services they provide to clients.
Brexit has already impacted the UK labor market. As a result of the uncertainty, job seekers from the EU have been reducing their search for positions in the UK. These workers may also be a potential resource for new hires and talent acquisition for UK banks relocating processes to the EU.
What Does This Mean?
Banks in the UK that have clients and operations in the EU should accelerate their preparations for a no-deal Brexit scenario. They should consider relocating UK workers to EU member states. Also, they should examine internal processes and controls to ensure proper functionality within the applicable legal and regulatory environments they will operate under in such as a scenario.
GMS’ team of global experts provides analysis and guidance on several relocation industry topics in our White Paper: 2019 Industry Update. With respect to Brexit, companies should identify employees and their family members in the UK and the EU who might face issues related to their:
- Work Permits
- Work Authorizations
- Travel Documents
- Health Insurance Requirements
- Living Arrangements
The UK has published several helpful sources of information and Brexit guidance for business. The guidance covers a wide range of topics, from “Importing after Brexit: check what you need to do” to “Prepare to work and operate in the European aviation sector after Brexit.” Companies should be sure to review the UK’s guidance to ensure they prepare accordingly, especially if they will be relocating UK workers.
GMS’ team of global relocation experts has helped thousands of our clients manage their need to relocate workers. Our team can help your company understand how a no-deal Brexit scenario may impact your need for relocating UK workers to the EU.
GMS was the first relocation company to register as a .com. The company also created the first online interactive tools and calculators, and revolutionized the entire relocation industry. GMS continues to set the industry pace as the pioneer in innovation and technology solutions with its proprietary MyRelocation™ technology platform.
Global Mobility Solutions is proud to be named and ranked #1 Overall, and #1 in Quality of Service by HRO Today’s 2019 Baker’s Dozen Customer Satisfaction Survey.
Learn best practices from Global Mobility Solutions. GMS relocation industry and technology experts are dedicated to keeping you informed and connected. Contact our experts online to discuss your company’s interest in learning more about relocating UK workers to the EU, or give us a call at 800.617.1904 or 480.922.0700 today.