Banks Still Need to Be Prepared for Hard Brexit, Bundesbank Says
Banks can’t be complacent and must still be ready in case the U.K. fails to reach a divorce agreement with the European Union, according to Bundesbank Vice President Claudia Buch.
“Each market participant should make sure that his or her business model is also sufficiently resilient with regard to a hard Brexit,” Buch said in a Bloomberg TV interview in Frankfurt on Wednesday.
“We’re just warning against being overly optimistic, that everything will be dealt with by the regulator,” she said. “There’s adjustment that individual market participants will have to take and they have to be aware of the fact that the probability of a hard Brexit is not zero.”
After months of talks, U.K. and EU negotiators have secured a provisional deal and British Prime Minister Theresa May is now trying to persuade her cabinet that the plan isn’t a sellout. Regulators have repeatedly told banks to be ready, and Buch’s comments are an attempt to keep up the impetus as the clock ticks down to Britain’s planned withdrawal next March, with the risk remaining that the provisional deal could collapse.
“My fear is that the market participants aren’t adequately prepared and that everyone is hoping that everything somehow will be settled politically,” Buch said earlier when presenting the Bundesbank’s Financial Stability Review. “If everyone relies on this somehow working and that someone will help out and adjust regulation accordingly, then that’s a risky move.”
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