Bundesbank president Jens Weidmann said the passporting rights are tied to the single market and “would automatically cease to apply if Great Britain is no longer at least part of the European Economic Area”.
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Jens Weidmann, head of Germany’s Bundesbank, said on Monday that banks in Britain will lose access to the EU market after Brexit unless the country remains in the broader European trading group that includes countries like Norway. These rights eliminate the need for individual licenses to operate in different European countries.
Passporting rights are considered by some to be vital to London’s position as a financial hub.
He added that it would also allow Frankfurt to take business away from London.
Weidmann, the head of Germany’s central bank, said the “hard Brexit” option would mean banks would automatically be stripped of their ability to conduct business across the European Union and open the door for Frankfurt to take business away from London.
Paris, Dublin and Frankfurt have all been touted as possible destinations for financial firms looking to move away from the United Kingdom after Brexit and the vice-president of the European Commission said the City of London would suffer severe consequences, should Britain decide to leave the European Union’s single market.
Foreign secretary Boris Johnson, a leading figure in the Leave camping during the referendum, also endorsed a new cross-party campaign, Change Britain, to ensure the country gained control over “laws, borders, money and trade” after Brexit.
“As a significant financial centre and the seat of important regulatory and supervisory bodies, Frankfurt is attractive and will welcome newcomers”, the European Central Bank rate-setter told the Guardian.
Ucits and other asset management functions were listed as activities that firms would have to restructure on the loss of passporting rights, alongside Euro clearing and settlement.
Moving operations would likely be manageable in terms of credit fundamentals, absent any other shocks, Moody’s says.
“Britain hasn’t even applied to leave yet”, he said, adding that severing the close ties that the United Kingdom enjoys with the European Union and Germany could suppress growth in the former.
The Chancellor of the Exchequer, Philip Hammond, is believed to be ready to give up access to the single market to satisfy voter concerns about immigration, according to reports.
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Currently, membership of the single market is conditional upon states accepting free movement of labour, one of the EU’s founding principles.
