ECB is concerned that banks have not progressed as far with their Brexit planning as they had originally indicated they would. ECB notes that it considers the risks of a no-deal Brexit to the overall euro area financial stability would be manageable, but that nevertheless banks should be preparing for all possible contingencies.
It is now calling on banks to speed up the implementation of their no-deal Brexit plans, both to minimise execution risk and to have time to overcome the operational challenges of transferring staff and clients and setting up the necessary internal processes and systems. It is reminding banks that any bank in the euro area is expected to have sufficient onshore capacity to originate business and access key FMIs continuously. It has noted some banks still need significantly to adjust their “back-branching” practices (ie servicing clients from the UK), and aligning their remote booking practices and back-to-back hedging strategies with supervisory expectations.