The Bank of England has reacted with fury over claims Brussels’ regulators have been using scaremongering tactics to persuade foreign banks to relocate their European headquarters by claiming post-Brexit there will be chaos in London. Sam Woods, a deputy at the Bank, claims “EU colleagues” have been presenting false and conflicting views to a “large foreign bank”. The BoE worker said the lender was inaccurately being told the British public be demanding “ever-tougher financial regulation” and focusing frustrations on City bankers after the UK quits the EU. In fact the City is expected to enjoy light touch legislation in comparison to the highly regulated EU, he said.
And Mr Woods confirmed the EU claim was the opposite of his own conversations with EU regulators after they expressed concerns over the UK implementing excessive bureaucracy.
Mr Woods said: “I met recently with the head of a large foreign bank, who was in London following a visit to the continent.
“He had been advised by some of our EU colleagues that with the departure of the UK from the EU, the British public would become alarmed at the size of the financial sector relative to the size of the economy and would therefore demand ever-tougher financial regulation in order to assuage their sense of unease.
“Thus it was put to him that it would be sensible for him to move more of his operations to Paris, Frankfurt or Dublin, where things would be easier.”
Mr Woods made the shocking claims during a speech at the UBS Financial Institutions Conference in Switzerland, where he dismissed suggestions of a post-Brexit backlash against banks.
He continued: “I told him that I thought it somewhat unlikely that the public would take much interest in the size of the financial sector unless it blew up again, and that 10 years on from the financial crisis we have largely implemented the reforms and are moving into more of a business-as-usual phase.”
However, Britain could change its style of regulating to respond faster to change, he said.
Mr Woods added: “So as far as the stringency of financial regulation goes, we at the Bank have a clear view of what would make sense for the UK in a post-Brexit environment.
“We should keep it calibrated roughly where it is now and have no desire whatsoever to weaken it.”
Britain’s finance ministry, parliamentary Treasury Select Committee and the Financial Conduct Authority have begun reviews of financial regulation after Brexit.
Much will hinge on what form of access to the EU market Britain secures after it leaves the bloc but Mr Woods said it would not be ideal for Britain to become a “rule-taker”.
Some lawmakers have suggested Britain should be able to revise its rules to keep London competitive as a global financial centre.
However, the Bank and the Financial Conduct Authority have downplayed this suggestion.
New Zealand-born Mr Woods is seen as a potential successor to Bank of England Governor Mark Carney, who is due to leave the Bank in January 2020.