The media reported that the Central bank of Great Britain is currently studying the possibility of introducing new restrictive measures against international financial institutions that operate in this country.
The information available to the media, which has not yet been confirmed or refuted at the official level, states that the Bank of England may introduce a rule imposing an obligation on foreign creditors to create British subsidiaries and providing for the abandonment of the practice of ensuring presence in the country through the operation of branches.
Insiders referred to by journalists say that in the UK, the threshold of requirements for international banks with business in the United Kingdom to create subsidiaries using their liquidity and capital will be lowered with a high degree of probability.
Experts say that the measure in question if adopted as a mandatory norm, will allow British regulators to take control of financial institutions that have suffered bankruptcy. Analysts also say that in the banking environment, this initiative is likely to be negatively perceived, since the creation of a subsidiary in another country requires significantly higher costs compared to the costs associated with the operation of branches.
Giles French, Executive Director of the Association of Foreign Banks, says that London’s status as a successful and interconnected international financial center is based largely on the availability of branch structures. He also said that changes in threshold standards should be studied in detail and evaluated so that the new rule does not become an obstacle for the business of foreign creditors in the UK and does not interfere with providing the necessary liquidity and capital.
The media reports that the intention to introduce a new rule in the financial sector is part of a large-scale project of review of the Bank of England bankruptcy of the Silicon Valley Bank, which occurred in March. This financial institution had a subsidiary in the UK, which came under the control of regulators after the collapse of the parent structure. The firm was then sold to banking giant HSBC. Last month, following the results of the rebranding, the subsidiary of the bankrupt bank became HSBC Innovation.
James Hickson, founder, and CEO of European lender Bloom, said that HSBC is a good haven for depositors. He also noted that a financial institution in the context of integrating a new constituent element into its structure should solve the task, which is to prove in practice that the corporate culture is not subject to destruction and all the success factors of a Silicon Valley bank, including interaction with the venture capital community, remain.
Ian Stuart, CEO of the British bank HSBC, said that HSBC Innovation will retain the concept of SVB UK, focused on startups.
The Bank of England is studying possible changes in the banking sector amid efforts by US regulators to tighten capital requirements for financial institutions. Preliminary information says that in the United States, the new rules will affect the largest creditors whose assets range from $100 billion to $250 billion. Small banks will not fall within the scope of the norm currently being developed.
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