(Bloomberg) -- The European Central Bank has communicated to global investment banks the final headcount and set-up their trading desks will need to have in the euro area, bringing a formal close to efforts that started when the UK voted to leave the European Union in 2016.
“We have turned the corner,” Andrea Enria, who leads the ECB's Supervisory Board, said in an interview. “I'm very proud of this process. It was not a territorial grab of business. It was very prudential, very focused on risk management.”
Global banks moved hundreds of billions of dollars of assets and thousands of jobs to the EU in order to retain access to clients there after Brexit severed many of the UK's ties to the bloc. After that unprecedented influx of sophisticated firms, the ECB conducted a probe to ensure the lenders' European trading operations weren't still too tied to London.
“We have just sent the banks final decisions on what we want them to do with respect to individual desks,” Enria said. “Some of them have already sufficient risk management capabilities in those desks. Some of the desks need to be beefed up.”
The banks also have to get approval from the ECB for certain mathematical risk models they use to steer their businesses, said Enria.
“We have a huge bottleneck of requests for approval of internal models,” he said. “But the process is very well advanced and we are close to the situation in which they would be like any other bank under our supervision.”
While the incoming banks were initially “very much in the mindset of minimizing any change,” they are now starting to look at how to develop their business in Europe's banking union, Enria said.
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