By Kalyeena Makortoff, Press Association Chief City Correspondent
A former board member of Germany’s central bank has hit back at suggestions that European regulators are not doing enough to save the financial sector from major business disruption after Brexit.
Andreas Dombret, who served as a Bundesbank board member from 2010 to 2018 and worked with the European Central Bank (ECB), said he was “astonished” to read comments from UK counterparts.
“It’s not the intention of Europe not to be prepared. How would that work? Why would Europe want that? That’s not in the interests of Europe,” he said.
He said European regulators are in regular discussions with Bank of England staff, which made the comments more surprising.
“I’m not in a position to tell you exactly what drove (the Financial Policy Committee) to issue this statement. I could tell you that from the European point of view, there is nobody who wants this project to fail.
“The Bank of England is a very, very serious supervisor and regulator so I was astonished to read that, and I still continue to expect that there would be an understanding.”
Mr Dombret admitted the ECB “had not made it entirely clear what they want but that doesn’t mean they cannot make it clear any day”.
“So they are also waiting for the political decision. It’s still a hypothetical case because it is not agreed, and I think I said this also one and a half years ago, it’s only signed when it’s signed, it’s only done when it’s done.”
Mr Dombret was in London to speak at the launch of zeb’s UK & European Banking Study, which profiles and ranks the top 50 European banks.
His comments come weeks after the Bank of England put the ball in the EU’s court over some more complicated financial instruments, calling for “timely action” from the bloc to protect against disruption to derivatives, insurance contracts and the transfer of personal data.
While the Bank said there has been “considerable progress in the UK” to address the risks, there has been only limited progress in the EU.
It was the latest warning shot from the Bank after it said in June that the EU needed to do more to prevent Brexit causing havoc in markets.
The UK is passing legislation through Parliament to allow EU-based providers of insurance policies and centrally cleared derivatives to continue to service their UK customers.
But the EU has yet to take similar action.
Mr Dombret also warned banks against “falling prey” to the “false sense of security” around a Brexit transition deal, stressing that time is running out to prepare for a no-deal scenario.
Brexit watchers are on tenterhooks ahead of the EU summit this week over whether an exit deal can be struck by negotiators.
“We should make no mistake: an agreement at the EU summit this week – as much as one would wish for one – is anything but a sure thing, and even the no-deal scenario remains possible in light of the fundamental differences between the negotiation blocs,” Mr Dombret said.
“Although Britain and the EU have agreed in principle on a transition deal lasting from Brexit to the end of 2020, it is part of a broader divorce settlement that has yet to be formally adopted,” he added.
“Financial institutions must not fall prey to a false sense of security that there will be an agreement and that they have sufficient time left to adapt to the new framework.”