EU draws a line through City talks on bank passport rights

The European Union continued to maintain to a hardline approach to the British banking sector, after diplomats confirmed there was no room for discussion about passport rights.

Passporting affords banks and other financial services providers the right to offer services across the EU’s current 28 members. The City of London has been lobbying the EU to allow the sector to retain these vital rights post-Brexit.

But Michel Barnier, the EU’s chief negotiator, has already made it clear that Brussels intends to remove the rights after March 2019, and on Wednesday several diplomats continued to brief the same message.

Speaking following a seminar held by the EU with envoys from the 27 remaining member states, one said: “There will be no passporting rights.”

Another official told Reuters that because the UK was leaving the single market and rejecting arbitration by the EU court, one of the single market’s key rules, “it’s clear that [banks] will lose passporting rights, as this is part of the internal market and our regulatory regime.

“When they do that, the only other alternative is what we have with some of our FTAs [free trade agreements].”

Another said: “The message was that, given the UK’s red lines, a free trade agreement is the only possible cooperation scheme.”

Seamless access to all EU countries is vital for many UK’s financial services firms, and they risk losing revenues if and when passporting rights are removed. There have also been estimates that up to 10,000 jobs could be moved out of Britain as a consequence.

Barnier has, however, said that while there was no room for discussion on passporting, some British regulations could be treated as “equivalent” to the EU supervisory regime, giving some favourable access.