UK-based banks looking to continue doing business in the euro zone after the Brexit transition period must move staff to the continent and not use the pandemic as an excuse to avoid relocations, the European Central Bank said today.
The ECB supervises the euro zone's biggest banks.
It said that lenders operating in the bloc must move sufficient capital, staff and management expertise to ensure the sort of physical presence required for prudent risk management.
"Banking Supervision has provided flexibility where required, notably to account for the impact of the lockdown measures and travel restrictions on the relocation of staff," the ECB said in a supervision newsletter.
"No additional flexibility is foreseen in principle," it added.
It said that remote working arrangements do not change its requirement to relocate staff to the EU.
However, the ECB added that banks mostly appear prepared for any Brexit eventuality, with the majority of lenders on track for the necessary operating models.
"Overall, the year-end risks for banks supervised directly by the ECB appear to be contained," the ECB added.