BOE’s Carney picks glass half full view on rules for European banks

Bloomberg

The Bank of England is holding off from forcing most European banks operating in the UK to become subsidiaries, but says it’s ready to get tougher if progress towards a Brexit deal breaks down.
Governor Mark Carney told lawmakers in London that making lenders and insurers go through the process of setting up subsidiaries, only to then reverse course later, would be costly and disruptive. He spoke after the central bank proposed new measures for handling the branches of European banks in Britain after the split with the European Union.
“Now is not the time that one has to say glass half empty, we’re never going to get a deal,” Carney said. “We’re in a position right now, as a consequence of the system under which we’re operating in Europe, where we do have a line of sight to the risks, where we do have direct conversations with the supervisors, where
we can catalyse actions if
necessary to manage the risks.”
While Michel Barnier, the chief EU negotiator, has ruled out a special deal for financial services after Brexit, Carney said there’s no good reason it couldn’t happen. “The UK financial system is, like it or not, effectively the banker for Europe in the most complicated bits of finance,” Carney said. “We are now in a position where you can have free trade in financial services. I don’t accept the argument that just because it has not been done in the past, it can’t be done in the future.”
Carney’s comments are the second time in a week he’s expressed optimism about the Brexit talks. In the past, he’s drawn criticism for seeming to negative on the UK’s prospects. Policy makers last week said the breakthrough in Brexit negotiations this month could prove to be positive for the economy by boosting household and corporate confidence.
In a statement, the central bank said that there are 77 branches of European banks in the UK, along with 80 branches of insurers.
These firms, which currently have the right to do business in Britain using a
single-market “passport,” can start applying in January for UK authorisation after Brexit.