Banks postpone assets move as Brexit looms

Bloomberg

Goldman Sachs Group Inc. and Standard Chartered Plc are among global firms postponing the transfer of several billion euros of capital outside the UK despite regulatory pressure to complete the move.
Other lenders including Citigroup Inc. have only shifted part of the assets they were initially planning to relocate due to the delays in Brexit, people familiar with the plan said. During meetings with the European Central Bank and German regulators, executives at the firms said they can’t be forced to transfer the capital as the UK is still in the European Union and clients still prefer to do business in London, the people said.
With the Brexit deadline postponed till October, several financial services firms in London are refraining from building up further reserves in the euro area until the last minute. The ECB requires banks to hold enough funds to ensure they can absorb potential losses at their European units. Banks in the region rushed to set up subsidiaries up in the euro-area and negotiated with the ECB the capital levels required to do so.
“Clients generally still prefer to do business with UK domiciled entities. From a capital market perspective, the UK is still where the liquidity is,” said Joe Cassidy, a partner at KPMG in London who leads the firm’s Brexit task force for financial services.
European regulators are arguing that granting of banking licenses was based on clear capitalisation plans for new entities, the people said, declining to be identified as the details are private. Standard Chartered said the lender “has set up and invested into our subsidiary in Frankfurt, which is operational and banking clients.” Citigroup and Goldman Sachs declined to comment.