Leading international UK-based banks are in advanced stages of planning to shift operations to Paris as London braces for the impact of Brexit, France's chief financial regulator has said.
Paris is among a number of European cities seeking to woo firms considering a move away from London to maintain their access to EU markets, and faces competition from Dublin, Frankfurt and Luxembourg, among others.
Benoît de Juvigny, secretary general of Autorité des Marchés Financiers (AMF), said that “large international banks” have conducted due diligence – the process of close scrutiny that large companies go through prior to making a major deal – to move operations to the French capital.
“In some cases I would say we are still at the level of inquiries or informal inquires by consultants, by lawyers and so on,” Mr de Juvigny told the BBC.
“But in other cases, especially regarding large international banks, it's a normal informal inquiry but they have been undertaking due diligence, and we are receiving lots of practical questions regarding the way they are going to be managed from our perspective, from their relationship with the French regulators.”
Mr de Juvigny added that “many other companies”, not just banks, had started to consider Paris as a base for their EU operations post-Brexit.
UK banks fear that a hard Brexit will result in the UK leaving Europe’s single market and therefore signal the loss of crucial passporting rights, which allow them to sell their services freely across the rest of the EU and give firms based in Europe unfettered access to Britain.
The loss of these rights could be devastating to the City of London as nearly 5,500 firms registered in the UK use passporting rights to operate in other countries.
Last week, Cyril Roux, the deputy governor of the Central Bank of Ireland, said several UK-based firms had started the application process to be authorised in Ireland.
Brexit Secretary David Davis said last week that the Government was potentially willing to pay the EU in return for the UK maintaining access to the single market.
It is the first time any minister has admitted Theresa May’s administration is open to the idea of paying Brussels to secure access to the trading bloc for British businesses and immediately led to a surge in the pound.
Last month, James Bardrick, the UK head of US bank Citi, said the main questions businesses had to answer was how quickly they needed to act on contingency plans aimed at protecting their businesses should the UK leave the single market.
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