London-Based Regulators in EU's Sights for Post-Brexit

(Bloomberg) -- The European Union insists on no cherry-picking by the U.K. in the coming Brexit negotiations, but many of the remaining 27 governments are jockeying for some possible plums for themselves.

In their sights are two of the bloc's most influential regulatory bodies -- the European Medicines Agency and the European Banking Authority -- now housed in London but almost certainly relocating to other EU cities after Brexit. As well as the prestige of hosting an influential EU body, countries see the benefit to their domestic markets if hundreds of European experts are located there.

The EMA was the subject of informal exchanges among representatives of EU governments in Brussels on Monday, diplomats said. Officials warn that clashes between the bloc's countries could spill over into the Brexit negotiations if decisions on the EMA and the EBA drag on.

“What we hope for is a decision before or certainly by the end of the summer,” Anders Samuelsen, foreign minister of Denmark, one of the countries bidding for the EMA, said in an interview in Brussels. A drawn-out process “would certainly affect the ability to keep the good staff that are now working in the agency.”

Employing about 900 officials and scientists, the medicines regulator tests and licenses all medications that drugmakers want to sell to the 500 million residents of in the EU. It has been based in London since its creation two decades ago. The pharmaceutical industry has warned that delays in deciding on the agency's relocation could disrupt the process of approving drugs.

Brexit Spoils

The fights over the EMA and the EBA highlight the side-effects of the U.K.'s decision to leave the EU. While the other EU nations say they are determined to stay united in the Brexit talks, they also are competitors for some of the spoils.

Most EU countries have expressed interest in replacing London as host to the drug regulator, including Ireland, Portugal and Sweden. Samuelsen said it is vital that the EU makes the decision by “objective criteria” rather than see it descend into European horse-trading. The EU has not yet said exactly how and when the decision will be made.

Initially there was speculation that the U.K. would seek to remain a member of the EMA and continue hosting it even after its exit from the EU. But in January, British Health Secretary Jeremy Hunt acknowledged that probably wasn't possible. That's mainly because Prime Theresa May has said the U.K. doesn't want to be subject to the jurisdiction of the European Court of Justice, which rules on appeals against EMA decisions.

Banking Authority

The EBA, which has been in charge of monitoring how national regulators implement the EU's financial rules since being set up in 2011 in the wake of the banking crisis, is also expected to leave London because May has vowed to take the U.K. out of the EU's single market. France, Austria, the Netherlands and Luxembourg are among countries interested in hosting the banking authority, which has a staff of about 160.

Governments are making their pitches for the bodies by emphasizing their links to industry as well as transport connections and other infrastructure. 

Bringing the EMA to the Netherlands “would guarantee its continuity for Europe as a whole” in conditions “that more than measure up to its current situation in the U.K.,” Dutch Foreign Minister Bert Koenders said in a statement when he launched a bid in January. The Irish government is emphasizing Dublin's proximity to London as a way of retaining the maximum number of existing staff, as well as its English language; Sweden is promoting its strong education and research capabilities; while Denmark is highlighting its existing central role in pharmaceuticals.

The Danish capital is home to Novo Nordisk A/S, the world's top insulin maker, as well as Lundbeck A/S and Genmab A/S, which produce treatments for psychiatric and neurological disorders and cancer treatments, respectively.

“We have a strong history in the pharma industry, nobody can say anything else,” said Denmark's Samuelsen. “We have the big infrastructure for a big institution like this; we have airports, we have international schools and we'll build a new building designed for the purpose.”

--With assistance from Stephanie Bodoni and Peter Levring

To contact the reporter on this story: Ian Wishart in Brussels at iwishart@bloomberg.net.

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net, Jones Hayden, Kevin Costelloe