Deutsche Bank to operate with UK branch after Brexit

Bloomberg

Deutsche Bank AG reiterated that it plans to carry on operating as a branch in the UK after the country leaves the European Union.
That plan is in line with guidance from the Bank of England’s regulatory arm, a Deutsche Bank spokesman said in an emailed response to questions on Monday in Frankfurt. The lender said it is working with regulators and is confident that there will be no disruption for its clients from Brexit.
The bank’s statement effectively denies part of a report published by the Financial Times, which had suggested it will probably transform its UK business into a ring-fenced subsidiary after Brexit, following pressure from supervisors. It cited unidentified people familiar with the views of Deutsche Bank executives.
Setting up a fully-fledged unit could be more expensive than running a branch because such local subsidiaries generally require capital to be held within that jurisdiction. The German lender has traditionally been able to use the cheaper branch strategy because EU rules allow an institution registered in one EU state to do business anywhere in the bloc.
That system, known as passporting, will no longer apply automatically in the UK after Brexit, although
the BOE has indicated
it doesn’t intend to stop EU-based banks operating as branches.
Banks across Europe are facing similar headaches as they prepare to re-jig their UK operations.
Supervisors at the European Central Bank have said they want the banks they oversee to use UK branches to conduct business in the UK rather than as a hub for EU activities.
Swiss-based UBS Group AG has picked Frankfurt
as its post-Brexit EU hub, CEO Sergio Ermotti told Bloomberg Television.
Deutsche Bank said last year that it would make Frankfurt rather than London the primary booking hub for its investment banking clients. “By definition this involves moving assets,” the spokesman wrote.
That process “is already underway with the full understanding of UK and EU regulators.”