Chancellor slams EU for tit-for-tat spat with US, over requirements for holding companies for non-EU banks
The chancellor has revealed he is less than impressed with the European Commission for proposing a holding company rule for banks which could hurt non-EU lenders, as the EU retaliates against similar measures in the US.
The European Commission last November put forward an intermediate holding company rule, which would require non-EU banks with EU operations to set up an intermediate holding company in the EU, without first consulting member states.
Critics of the proposal have slammed it as an attempt to get back at the US for announcing a similar rule in 2014 and warn it could hurt US lenders, as well as Canada following Brexit.
Read more: London: Our city of eternal resilience is not endangered by Brexit
"We are particular concerned with the way the Commission introduced the measure, without prior discussion with member states or any substantive impact assessment," Philip Hammond wrote in a letter to chair of the Treasury Committee, Andrew Tyrie, which has been made public today.
Tyrie added:
The Commission’s decision to introduce the intermediate holding company measure without prior discussion with the UK government, or indeed other member states, is as unsurprising as it is unacceptable.
The UK is leaving the EU, but until a final agreement is reached, it is imperative that the government continues to defend the UK's interests in the Council on this and many other issues.
Read more: Germany's central bank chief is trying to woo British banks again
The Treasury Committee is currently running an inquiry into bank capital, which will closely examine regulation introduced since the financial crisis and scrutinise whether it is doing enough to put an end to "too big to fail" banking culture.