Andreas Dombret, a member of the German Central Bank Board said that the banks headquartered in the UK could lose access to the EU market after the Brexit's completion, so they will probably have to relocate some operations on the continent.
Currently, banks headquartered in the UK can provide free services in the EU through a system of "passport", considered to be the most important feature of the single European market for the companies in the financial sector. But this was questioned after British citizens voted in favor of leaving the EU.
Almost 5,500 companies registered in the UK use the passport rights
Passport rights are an important factor underlying the London`s global financial center position. The loss of these rights would be a blow to the financial services industry, responsible for 12% of the GDP of Great Britain. Almost 5,500 companies registered in the UK use the passport rights to operate in other states.
Banks will probably lose passport rights and any arrangements that seek to create a substitute will likely be hazardous and the access to European markets will be highly uncertain, said Dombret.
Gloomy prospects
"So it seems that the access to the Eu Market by the UK seems rather obscure. I expect that London will remain a leading global financial center.
However, I expect that the financial firms based in the UK will move at least some operations to ensure against the risks caused by the results of the negotiations" the German official said.
Instead, the German Finance Minister, Wolfgang Schaeuble, said this month that London offers financial services that benefit the whole Europe and the European Union should recognize that in a reasonable Brexit agreement with Britain.
"We don`t want to punish the British for their decisions. We want to keep the UK close to us", the German official said in an interview for Tagesspiegel.
"City of London is a financial center that serves the entire European economy. London provides a quality of financial services that isn`t found on the mainland. That will change soon after separation, but we must find a reasonable settlement with the UK", Wolfgang Schaeuble explained.
