EU Says Proposed Cross-Border Banking Rules Target ‘Core’ Services

The EU is cracking down on the ability for banks outside the EU to sell services to the bloc, with a focus on “core banking.”

Financial Times writes that this will hopefully ease concerns in the industry about more sweeping restrictions.

EU executive vice president Valdis Dombrovskis said it would be left up to bloc leaders to make the rules as the legislation goes forward.

He said there would hopefully be a focus on legislation “to cover core banking services” ahead of everything else.

“The provision of core banking activities is conditional on having an establishment in a member state, meaning a branch or subsidiary . . . it must be said that implicitly those requirements were de facto there already.”

Coming down harder on cross-border sales, the commission also intends to give more power to regulators to let banks turn some branches into better-supervised subsidiaries, with more rules about what services can be sold by non-EU groups that don’t have a physical branch or subsidiary in the union.

FT writes that the provisions have worried lawyers and lobbyists for the banks because the framing of the draft legislative proposals might stop all cross-border selling from non-EU countries into the bloc’s market. That could include investment banking and other markets activities with separate rules.

The Brussels proposals are looking to strengthen a general EU requirement, stating that banks from elsewhere should have a branch or legal entity in a member state where they want to do business, according to FT.

EU commissioner for Financial Services Mairead McGuinness said in November that there would need to be a new EU payment strategy for the next few years, to start in the first half of 2022.

See also: Europe Needs New Rules to Be Global Leader in Payments, Says EU Commissioner

McGuinness said that while more competition wasn’t a bad thing, the lines between market players “are becoming blurred” and that more competition would require safeguards in place for risks and making a level playing field.