Brexit brings EBA down from London high-rises

Bloomberg

The European Banking Authority gets a new home, as Brexit forces the regulator and its 180 employees to abandon their high-rise digs in London’s Canary Wharf financial district and relocate to the continent.
Eight cities are competing to host the EBA. The prestige of housing the EU’s top banking regulator could lend some extra gloss to major euro-area financial hubs such as Frankfurt and Paris as they try to challenge the dominance of London. If the EBA lands in Prague or Warsaw, it could help enhance the influence of countries outside the single currency zone.
The EBA, created in 2011 in the wake of the financial crisis, sets standards, coordinates supervision across the EU and runs the bloc’s biennial stress test. The EU’s General Affairs Council will choose the new seats of the EBA and the larger European Medicines Agency, and there has been plenty of horse-trading in the run-up to the vote.
Dirk Schoenmaker, a senior fellow at the Bruegel think tank in Brussels, said Monday’s decision will be part of a broader political deal. “The link with the ECB is important, so Frankfurt,” also home to the European Insurance and Occupational Pensions Authority, he said. “After that, because the EBA has to mediate between euro and non-euro countries, an out country would be a logical choice.”

MAJOR FACTOR
While the EBA has influence on the rulemaking side, it doesn’t oversee lenders and has seen its profile wane since the European Central Bank became the euro-area supervisor in 2014. The EBA’s move is therefore unlikely to influence banks looking for a base in the EU after Brexit, according to Richard Reid, an honorary senior research fellow in finance and regulation at the University of Dundee.
“I doubt if the location of the EBA will be a major factor in the decision-making process by which any bank exiting the UK will select a new base in the EU,” Reid said. “Such banks take a whole slew of factors into account, including proximity to counterparties, clients, national regulators and central banks, as well as all those other factors relating to infrastructure and ease of doing business.”
Andrea Enria, head of the EBA, has said he looks forward to the decision, because the uncertainty has made it harder for him to retain staff. The eight cities have set out their unique selling points. Dublin promoted itself as the English-speaking alternative, minimizing “disruption for staff and families.” In addition to its vast musical heritage, Vienna chose to highlight the “highest-quality mountain spring water” that flows from its taps and the fact that it’s the “only major capital with a significant winegrowing industry.” Brussels, home to the EU legislative machine, and Luxembourg, which hosts a large investment fund industry, are also in the running. The EU’s criteria in the selection include accessibility, adequate schools and the assurance that the agencies could be up and running by Brexit day.
The outcome of the secret ballot, whose rules have drawn comparison with those of the Eurovision Song Contest, will be anno- unced in Brussels. Some cities applied to host both the EMA and EBA, but if selected to receive one of the agencies, its bid for the
second would be thrown out.