(Bloomberg) --
The European Central Bank says some lenders still haven’t done enough to beef up their European Union operations before the Brexit transition phase expires at the end of the year.
Some banks need to make more progress in moving staff and assets to their EU units, an ECB spokeswoman said in a statement. Together with national regulators, ECB staff “have engaged with these banks to make sure there is a shared understanding of the path toward the target operating model,” she said.
The Financial Times reported the statement earlier.
Global banks that have used London as an EU hub for decades are spending millions of euros to build out units in cities including Frankfurt, Dublin and Paris to retain clients in the bloc after the U.K. voted to leave. While the ECB has acknowledged uncertainty over how the divorce will play out, the watchdog wants the new operations set up quickly and to be robust enough to withstand turmoil.
That means it’s not just about assets and employees. The units also need to try to be “structurally profitable” as well as “operationally self-standing” in key areas, and not overly reliant on their parent companies when booking assets, according to the statement.
The last issue has been key for European watchdogs, who want much of the risk generated by EU units to be managed locally.
“The ECB is encouraged by the fact that some banks have substantially reached their target operating model already or are well on track toward that target,” the spokeswoman said.
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