Barclays May Transfer 5,000 Clients to Ireland in $217 Billion Brexit Move

(Bloomberg) -- Barclays Plc won permission to transfer large parts of its business from Britain to its Dublin-based subsidiary if needed, with a judge disclosing that the Brexit-driven move could affect thousands of the bank’s corporate clients.

The London-based bank had requested court approval for the potential move, which was granted by High Court Judge Richard Snowden on Tuesday. Snowden described the move as “huge,” saying it would involve 5,000 clients and transfer 190 billion euros ($217 billion) in assets. Barclays had about 1.2 trillion pounds ($1.6 trillion) in total assets at the end of the third quarter.

Snowden said that due to lingering concern about the prospect of a no-deal Brexit, the bank couldn’t wait any longer to ask for approval and risk its ability to service clients from outside the European Union. Barclays had previously told customers and investors that the total assets of Barclays Bank Ireland are expected to grow from 3.2 billion euros to 250 billion euros.

"The design of the scheme has been based upon an assumption that there will be no favorable outcome of the current political negotiations between the U.K. and the EU as regards passporting or the grant of equivalence status to the U.K. in respect of financial services," the judge wrote.

The reorganization would see Barclays relocate part of its deposit-taking business to Ireland. Among the 5,000 clients being transferred to Barclays Bank Ireland, one-quarter have deposits that will move with them from Barclays Bank Plc, according to Judge Snowden.

Barclays Bank Plc is the bank’s non-ring-fenced unit, which houses its investment bank and other businesses outside of British retail banking.

Well-Advanced

"As we announced in 2017, Barclays will use our existing licensed EU-based bank subsidiary to continue to serve our clients within the EU beyond 29 March 2019, regardless of the outcome of Brexit,” a Barclays spokeswoman said. “Our preparations are well-advanced and we expect to be fully operational” by the Brexit date, she said.

With just two months to go before Brexit, global banks are bracing for the possibility that there will be no transition to soften the blow to financial services. After picking Dublin as the location for Barclays’s EU unit, Chief Executive Officer Jes Staley said in October that the Central Bank of Ireland had approved his firm’s expansion there.

Most Affected

Earlier this week, Chairman John McFarlane called his lender "probably the most affected, or at least one of the most affected institutions" by the turmoil, as he mulled whether the bank should pull the trigger on moving assets to Ireland.

"The problem is that I don’t need to do that, or we don’t need to do that, if we know we got more time, or if there’s a deal with transition and so forth,” McFarlane said Tuesday at a conference in Brussels. “But in the absence of knowing,” the bank has “no choice but to do it," he said.

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