European Central Bank advises firms to plan for "a no-deal scenario leading to a hard Brexit with no transition".

British banks operating in Europe have been warned by the ECB that they cannot rely on a transition deal with the European Union and must plan to “implement their hard Brexit contingency plans”.

The ECB stated that as transitional arrangements were “not yet legally binding”, firms need to “prepare for all contingencies” and warned that “there is still political uncertainty as to whether there will be a transition period”.

In stark contrast to the Bank of England, the ECB has instructed companies to prepare for “a no-deal scenario leading to a hard Brexit with no transition”.

The Bank of England in its “Update on the regulatory approach to preparations for EU withdrawal” published on March 28 stated that it “considers it reasonable for firms currently carrying on regulated activities in the UK by means of passporting rights, or the EU framework for central counterparties, to plan that they will be able to continue undertaking these activities during the implementation period in much the same way as now.” 

In letters published by the Bank of England, it made it “clear to relevant firms that they may plan on the assumption that UK authorisation or recognition will only be needed by the end of the implementation period.”

Dr. Ray NultyComment