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BREXIT

Brits in EU risk losing UK bank accounts ‘within weeks’

Some of Britain's biggest banks have begun contacting customers in European Union countries, warning them that their accounts will be closed down within weeks because the cost and complexity of operating without a continuation of pan-European banking rules is too much.

Brits in EU risk losing UK bank accounts 'within weeks'
Lloyds Bank expects to close at least 13,000 accounts. Photo: Lloyds Bank
According to a report in The Times, thousands of Britons who live in Europe face being stripped of their UK bank accounts and credit cards, because of the UK government's failure to agree rules for operating after Brexit. 
 
Each of the EU's 27 member states has different rules for cross-border bank accounts which will start to apply immediately the UK's transition period ends on 31st December 2020. 
 
“In some cases, continuing to serve customers would be incredibly complex, extremely expensive and very time-consuming, and simply would not make economic sense,” a source at one British bank told the newspaper. “This is passporting — this is the reality of Brexit.”
 
 
If a way is not found to continue pan-European banking rules, or passporting, UK banks will br breaking the law if they don't apply for new banking licenses in each European Union Country. 
 
 
Lloyds, Britain’s biggest banking group, began writing to customers in August, warning them that their bank accounts would  close down on December 31.
 
The bank estimates that 13,000 customers, including those based in Holland, Slovakia, Germany, Ireland, Italy and Portugal, would lose their accounts. 
 
“If customers have regular deposits into, or payments out of, their account, they will need to make other arrangements before their account is closed,” the bank said. 
 
Barclays and Coutts have also started contacting customers. 
 
“In light of the UK leaving the EU at the end of 2020, we continue to review the services we offer to customers within the European Economic Area (EEA), and any impacted customers will be contacted directly,” Barclays said in a statement. “The timings for account closure will depend on the type of product that a customer holds, but we will always give notice to customers.”
 
“In the event that no alternative to the European Economic Area passporting regime for financial services is agreed between the UK and EU, we have taken the difficult decision to withdraw from offering our services to clients who reside in the EEA,” Coutts said. 
 

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ECONOMY

Switzerland must strengthen control of its financial sector, IMF warns

The IMF urged Switzerland on Thursday to strengthen its financial sector regulation as supervising UBS has become "more challenging" since it grew into a global banking behemoth after its takeover of Credit Suisse.

Switzerland must strengthen control of its financial sector, IMF warns

Switzerland’s biggest bank was strongarmed by the government into buying Credit Suisse last year over fears that the second largest lender in the country might go under and spark a global financial crisis.

“Lessons from the CS (Credit Suisse) case should inform further reforms to strengthen the regulatory and supervisory framework,” the IMF said in a statement concluding its annual staff mission to Switzerland.

Like UBS, Credit Suisse was among 30 international banks deemed too big to fail due to their importance in the global banking architecture.

The merger raised serious concerns in Switzerland around jobs, competition and the size of the resulting bank relative to the Swiss economy.

“The complexity of the combined bank’s global operations also makes supervision more challenging,” the International Monetary Fund said.

“In the event of future crisis, the previous merger options may no longer be feasible,” Pelin Berkmen, the head of the IMF delegation, warned at a press conference.

The Washington-based institution noted that UBS is the largest “G-SIB” — global systematically important bank — relative to its home country’s economy.

The IMF said the “powers and resources” of the Swiss financial sector’s supervisor must be increased “to enable early and effective intervention” when necessary.

The G20’s Financial Stability Board, set up following the 2007-2008 global financial crisis to lead industry reforms, made a similar recommendation in February.

The Swiss Financial Market Supervisory Authority (FINMA) has also called for increased powers to punish bad banks.

UBS bought Credit Suisse at the bargain price of $3.25 billion.

The bank initially reported a net profit for 2023 of $29 billion but it published a revised figure of $27.8 billion on Thursday after reviewing the fair-value estimate of the deal.

The IMF said the Swiss economy “boasts strong fundamentals” and growth is “expected to recover gradually this year” to 1.3 percent, followed by 1.4 percent in 2025.

But it added the country faces “several challenges” including “mounting spending pressures”, future financing gaps in the pension system and vulnerabilities in the real estate sector.

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