European Union governments paved the way on Monday for more oversight and tighter rules for investment firms wanting to operate in the euro zone, a move that will mostly hit the UK's financial services industry after Brexit.
The new rules, if approved by the EU Parliament, mean investment firms based in Britain after Brexit will need to open euro zone branches to continue offering a full range of services.
More than half of the 6,000 European investment firms, including US giants Goldman Sachs and JPMorgan, are based in Britain. Four big US banks have warned staff that commuting from London to European cities is "not a long-term option" after Brexit and that financial support for travel and accommodation costs will be withdrawn within months of their jobs being transferred, the FT reports.
"We know that behind the scenes firms are continuing to plan for a 'no deal' scenario."
"The Council (of EU states) text further strengthens the equivalence regime that would apply to third country investment firms," the document said, adding that more powers would be given to the EU executive commission to monitor foreign financial firms which operate in the euro zone.
Under the new draft rules, investment firms would also be monitored by the European Central Bank, as large banks are, and would need to distribute their assets both inside and outside of the euro zone, which could increase costs.
Financial markets lobby groups strongly resisted the proposals, arguing that they would limit EU companies' ability to access other critical global markets and amount to a form of capital control that could isolate the EU.
Banks and other financial companies have shifted at least £800bn worth of assets out of the country and into the European Union because of Brexit, EY said in a report published Monday.Many banks have set up new offices elsewhere in the European Union to safeguard their regional operations after Brexit, which means they also have to move substantial assets there to satisfy EU regulators.
Other firms are moving assets to protect clients against market volatility and sudden changes in regulation.The consultancy said the figure represented roughly 10% of the total assets of the UK banking sector, and was a "conservative estimate" because some banks have not yet revealed their contingency plans.
"Our numbers only reflect the moves that have been announced publicly," said Omar Ali, head of financial services at EY. "We know that behind the scenes firms are continuing to plan for a 'no deal' scenario."
Royal London has launched a subsidiary in Ireland in preparation for business after the UK leaves the European Union. The insurer's Irish and German business has been transferred to Royal London Insurance DAC in Dublin, with an expansion of its existing office and an additional 20 jobs created.
Britain began rehearsals this week for the upheaval of a no-deal Brexit by lining up 87 trucks at a little-used airport for a trip towards the United Kingdom's most important trading gateway to continental Europe. Trucks would face six-day queues to board ferries at Dover if new customs checks in the event of a no-deal Brexit were to delay each vehicle by just 70 seconds, according to government-commissioned research.