London Must Lose ‘Euro Business’ After Brexit, EU’s Weber Says – 4 April, 2017

A top European Parliament ally of German Chancellor Angela Merkel said London’s financial-markets business tied to the euro must be pared back after Brexit, highlighting one of the possible red lines in the upcoming negotiations.

“When Great Britain is leaving the European Union, for us it’s not thinkable that, at the end, the whole euro business is still managed in London,” Manfred Weber, leader of the Christian Democrats in the 28-nation assembly, told reporters on Tuesday in Strasbourg, France. “The euro business should be managed on EU soil.”

The EU Parliament is gearing up to set out its priorities for Brexit talks due to start next month, offering signals about how much room for maneuver the U.K. and and its 27 partners in the bloc will have during the two-year divorce process covering everything from finance to fisheries. While the 751-seat Parliament won’t take part in the negotiations, it does have veto power over any agreement and will play a consultative role.

Among the potential prizes for capitals across the EU are financial-markets jobs now based in London, including at the European Banking Authority, an agency whose seat will move as a result of Brexit. As banks prepare to relocate employees from the U.K. in anticipation of the country’s exit from the EU, the fate of British-based work tied to the clearing of euro-denominated derivatives trades remains unclear.

French and German officials have called for clawing back clearing in euro-denominated derivatives from the U.K., where trillions of euros of swaps trade. The European Central Bank has tried in the past to take euro-clearing away from Britain.

While Weber declined to comment Tuesday on the specific issue of clearing and supervision of euro-denominated derivatives trades, saying in reply to a question “let’s discuss details when it comes to the details,” he stressed a general line.

“The people expect that we do the euro business and all the business which is linked to the euro on European soil,” he said. “This is European supervision, this is European Banking Authority and defending European jobs.”

He also alluded to the competition among EU capitals for Brexit’s banking spoils.

“I have the obvious interest that places like Amsterdam, like Paris, like Dublin, like Frankfurt, can win and others will lose,” Weber said. “It will be not a positive thing for the City of London at the end.”

Source: Bloomberg