|Brussels eyes new rules to tighten grip on branches of non-EU banks |
The European Commission is preparing to grant regulators permission to force foreign banks to turn their European branches into subsidiaries, as part of moves to implement Basel III standards. The change is expected to only apply to large branches with at least €30bn worth of assets. Barney Reynolds, head of financial services at Shearman & Sterling, argued that the latest discussions were
"all part of an ongoing attempt to grab business through regulation" and
could backfire. "It's hard to think such an approach will work, since the money will look for a home that does not seek to control it to the degree the EU
would wish," he added. "Also, subsidiaries are embroiled in underwriting
the Eurozone's massive risks, whereas branches are not. Ultimately,
these steps are likely to be self-defeating."