The submission of the ‘Article 50 letter’ by the British Government to the European Commission on 29 March fired the starting gun for Brexit negotiations. It is likely, therefore, that the UK will depart the European Union (EU) on 29 March 2019 on terms which are, currently, highly uncertain. This will oblige financial institutions with significant operations in the UK and the rest of Europe to plan for, and implement against, significant and complex change. The Prime Minister expressed confidence on 29 March that a comprehensive deal with the EU on all major matters could be sealed within the next two years.
Both sides have already begun to talk about ‘transitional’or ‘implementation’ phases, although the EU’s chief negotiator Michel Barnier and the leaders of the main groups in the European Parliament have all stated that these cannot last more than three years. In practice, however, we believe the window of opportunity to put plans in place will be potentially as little as 18 months, and that delay beyond that period will seriously compromise plans’ effectiveness.
EY has invested in developing insights and preparing practical approaches to dealing with the considerable operational challenges posed by Brexit. This paper, the fifth in a continuing series, concentrates on addressing the broad implications for financial institutions across banking, insurance, wealth, asset management and market infrastructure. We discuss difficult technical questions across a range of disciplines; examine the likely components of a closely coordinated integration plan; and suggest the recipe for success in implementation whilst continuing smoothly to meet the demands of shareholders, regulators, and other stakeholders.
Our thoughts are based around extensive experience of working with clients in both public and private sectors, many of whom are in various stages of their Brexit planning to prepare for and deliver necessary change. We would like to take this opportunity to thank all those who have contributed to our thinking and to welcome further debate and discussion. We look forward to engaging with you around this vital issue as we all work to maintain a strong and resilient financial services sector across the UK and Europe.
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