Transitional arrangements after Brexit could take 18 months or more, says Charlotte Hogg, the new Bank of England deputy governor
The Bank of England (BoE)'s new deputy governor Charlotte Hogg today said UK banks will need 12 to 18 months at least to make transitional arrangements after certainty on Brexit negotiations is reached.
Appearing before the Treasury Select Committee, Hogg said banks will need additional time after the two-year negotiations are reached to change their business models in terms of hiring and setting up risk controls.
However, Hogg added: "We're very blessed in London that we have such a richness of talent and systems that we can rely on that doesn't necessary exist elsewhere."
During the question and answer session, Hogg also agreed with a statement by BoE governor Mark Carney that Brexit is not the biggest risk to the UK's financial stability as its effects have been measured by stress testing.
"Stress testing should give us all some comfort that we have sufficient capital liquidity to make it through some number of shocks, but you have to be mindful that things can move quite quickly and be prepared for those," Hogg said.
She added that risks like those posed by cyber security are significant because they haven't been tested.
Read more: BoE's Carney: A smooth Brexit could lead to tighter monetary policy
Hogg, who moved to the BoE from Santander bank, said she will be able to publicly challenge Carney and her background in consumer finance will bring another perspective to policymaking. The deputy governor said she has already had disagreements with Carney over staffing and organisational issues in her role as chief operating officer, which she started in 2013.
However, lawmakers today criticised Hogg for sticking too close to the bank's orthodoxy and not challenging the central bank's existing thinking.
Hogg replaces Minouche Shafik as deputy governor for markets and banking. She will serve on the monetary, financial and prudential regulation policy committees.
Lawmakers also questioned Hogg over conflicts of interest as her brother is a strategy executive at Barclays and her mother is a non-executive director the Financial Conduct Authority. Hogg said she had not considered removing herself from the Prudential Regulation Committee's decisions on Barclays before the hearing today.