PwC AFME report on operational impact of Brexit on banking

AFME has recently commissioned a report from PwC, outlining the operational impacts and transformation challenges that Brexit poses to the provision of banking services in the EU.

The report, ‘Planning for Brexit – Operational impacts on wholesale banking andbrexit capital markets in Europe’ aims to provide policymakers and other industry stakeholders, both in the EU27 and the UK, with a fact-based analysis of how these challenges are likely to affect the financial services industry. To inform the study, information was gathered by PwC from previous case studies and from 15 banks spanning a range of sizes, activities, origins and legal entity structures. They include EU27 headquartered, UK headquartered and non-EU headquartered banks in broadly even measure.

Key findings of the report include:
The Brexit transformation will be highly complex for wholesale banks and contains many interdependent activities. Firms providing a significant proportion of current industry capacity will need to execute transformation programmes which will extend beyond Article 50 timescales and in many cases up to three years after Brexit has been completed; or even longer if the post-Brexit trading relationship between the EU and UK remains unresolved for a protracted period.

In executing their transformation programmes, banks will be heavily dependent upon timely approval of licenses by their new EU regulators. This represents a critical step in the implementation of new business models and is likely to occur at a time when regulators will see a peak in requests following Article 50 activation.

Banks are currently proceeding with two year tactical plans to maintain continuity of service.  However, these plans are likely to be sub-optimal for clients and market effectiveness, and will be dependent on reaching agreement about an interim business model that is acceptable to new EU27 regulators and can be put in place before the UK leaves the EU.

Read the report.

Please let us know if you are interested in discussing this.

Günther Dobrauz
Partner
Leader Legal FS Regulatory &
Compliance Services
+41 58 792 14 97
guenther.dobrauz@ch.pwc.com

Published by

Guenther Dobrauz

Guenther Dobrauz

Guenther Dobrauz
PwC
Birchstrasse 160
Postfach, 8050 Zurich
+41 58 792 14 97

Guenther Dobrauz is a Partner with PwC Switzerland and Leader Legal FS Regulatory & Compliance Services. He advises Swiss and international financial services firms in all compliance and regulatory matters and also specialises in structuring of investment vehicles.

Guenther Dobrauz received his Masters and PhD degrees in law from Johannes Kepler University (Linz, Austria). He holds an MBA from the University of Strathclyde Graduate School of Business (Glasgow, UK) and has participated in Harvard Business School’s Executive Education Program.

Guenther Dobrauz was Legal Counsel of an international hedge fund group and served as Managing Partner and Legal Counsel of a Swiss Venture Capital firm. He has practiced in court and with a leading business law firm.