The European Banking Authority (EBA) has warned that banks in both the EU and UK are not prepared for a no-deal Brexit.
The European regulator warned that preparations already underway are ‘inadequate’ and urged institutions to “speed up their preparations for a no-deal Brexit in March 2019.”
"Firms cannot take for granted that they continue to operate as at present nor can they rely on as yet unrealised political agreements or public policy interventions," Andrea Enria, Chairperson of the EBA, said.
He added: "Risks, capacity and legal implications must be examined and addressed."
Financial services
International banks and financial services institutions have been submitting applications to move operations to Ireland and to the continent since Brexit was announced.
Some 21 financial services organisations have now confirmed plans to move all or some of their operations to Dublin - nearly double the amount heading to the city’s main rival locations.
Piers Haben, EBA director of banking markets, innovation and consumers, said: "Big banks can't assume they can put off the full application process."
The EBA warned that banks should have the right management and permissions in place to continue trading after Britain's exit from the EU on March 29, 2018.
The regulator, which is moving its operations from London to Paris, said banks should not rely on "possible public sector solutions" to help them.
Functioning markets
The European Central Bank and the Bank of England have been in talks to keep markets functioning in an orderly fashion next March.
The advice from the EBA comes amid concerns contracts worth billions of Euros trading between Britain and the continent could become void as firms no longer have the authority to service contracts.
Currently, there are $34 trillion of derivative contracts and 36 million insurance policies that have the potential to destabilise the industry.
Financial institutions and the Bank of England have argued that the issue should be resolved at government level because there are too many contracts for the banks to sort out by themselves.
"There is widespread perception there will be a public policy miracle. I don't think banks can rely on a general, catch-all public intervention," Haben said.
