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Germany Prepares for No-Deal Brexit to Avert Financial Turmoil

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BM.GE
12.12.18 19:59
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As the bloc girds itself against potential fallout from Britain’s political crisis, Chancellor Angela Merkel’s cabinet approved new rules that allow Bafin, Germany’s financial regulator, to set transition arrangements for U.K. banks, insurers and other financial companies through the end of 2020. Germany also sought to boost its appeal as a banking hub by loosening its rigid hire-and-fire laws for top dealmakers.

With Prime Minister Theresa May facing a vote of confidence in her leadership on Wednesday, Germany urged British lawmakers to accept the deal that’s been agreed with the EU, as the only alternative is a disorderly exit. The country’s export-led economy is particularly exposed to trade disruptions.

“We don’t have much time, but we do still have a little bit of time,” Merkel said in remarks to lawmakers in parliament in Berlin on Wednesday. “The only thing I can tell citizens in Germany is that we’re working hard on ensuring an orderly Brexit and that, in parallel, we’re preparing for the eventuality that it won’t be orderly.”

“We don’t have much time, but we do stillUnder the draft legislation, Germany will let U.K.-based financial institutions continue EU passporting rights through 2020. The extensions are to maintain existing contracts and will be granted by Bafin on a case-by-case basis. have a little bit of time,” Merkel said in remarks to lawmakers in parliament in Berlin on Wednesday. “The only thing I can tell citizens in Germany is that we’re working hard on ensuring an orderly Brexit and that, in parallel, we’re preparing for the eventuality that it won’t be orderly.”

In addition to possible disruptions for individual companies from a no-deal Brexit, “the mass ending of financial-market contracts, or their transfer to companies that have the required permits, could also lead to market turmoil and cause risks for financial-market stability,” the draft legislation says.

“It will thereby be easier for these institutions to separate from their managers to avert risk for the overall financial system,” according to the Finance Ministry.

Source: Bloomberg