(Bloomberg) -- Banks planning to set up units in the euro area for life after Brexit got some welcoming words from their future supervisor.
The European Central Bank, which oversees lenders in the currency bloc, said on Wednesday that it recognizes the challenges firms face as they relocate from the U.K., and will provide flexibility as they build up their operations.
The ECB and national euro-area authorities “may allow more time for banks to meet certain supervisory expectations regarding their local risk management capabilities and governance structures, and to move to an adequate and balanced business organization within the euro area,” according to an ECB statement.
The ECB said it would assess each bank’s long-term operating plans to determine how much flexibility to grant.
Banks are in the process of applying for authorization from euro-area supervisors. The ECB on Wednesday reiterated that applications must be submitted by the end of the second quarter at the latest. There may be about 100 banks currently operating out of the U.K. that need EU licenses.
The ECB said banks should not use a possible transition period extending from the U.K.’s withdrawal from the EU next March until the end of 2020 as an excuse to delay planning for Brexit. Instead, they should use the time to implement their plans. And the ECB expects banks to continue preparing for all outcomes.
That’s at odds with the stance taken by the Bank of England, which has sought to reassure banks and insurers that they can rely on a transition period to ease their adjustment to Brexit.
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