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Brexit-related information for banks

On 31 January 2020, the United Kingdom left the European Union (EU). As agreed upon in the Withdrawal Agreement, a transition period lasting until 31 December 2020 also commenced at that time. For now, nothing has changed for financial intermediaries. Nevertheless, affected financial intermediaries should use this time to make appropriate preparations for the post-transition period. Due to the close economic and legal ties between the EU Member States and the United Kingdom, Brexit will have far-reaching consequences for credit institutions and financial service providers active in Europe. This holds true in both economic and supervisory terms.

Access to the single European market is a major aspect in this context. At present, many financial intermediaries benefit from what are known as EU passporting rights, which authorise banks in the European Economic Area (EEA) to serve their customers throughout the entire EEA using just a single EEA-licensed entity. However, as things currently stand, the use of these EU passporting rights with the United Kingdom will cease in both directions once the transition period comes to an end. Against this backdrop, banks must re-examine their location policies.

With regard to establishing new entities or expanding existing entities in Germany, the Federal Financial Supervisory Authority and the Deutsche Bundesbank are available to assist you in Brexit-related issues pertaining to banking and financial regulation, payment transactions and market operations.

European Commission issues readiness communication

At the end of the year, the transition period agreed upon between the European Union (EU) and the United Kingdom (UK) for the period following the UK’s withdrawal from the EU on 31 January 2020 will come to an end. Against this background, the European Commission issued a “Communication on readiness at the end of the transition period” on 9 July 2020 (see link below), which was successively supplemented by sector-specific readiness notices.

These notices are intended to help national authorities, enterprises and citizens to prepare for the changes that will come after the end of the transition period. This was set out to ensure that EU rules would remain applicable during this time and that enterprises would be able to prepare for the new legal and economic relationship between the EU and the UK.

The communication provides a sector-by-sector overview of the most important areas that will see changes, regardless of the outcome of the ongoing negotiations between the EU and the UK. In particular, the following areas are affected:

  • Banking and payment services 
  • Credit rating agencies
  • Asset management 
  • Institutions for occupational retirement provision
  • Post-trade financial services
  • Investment /market trading
  • Insurance and reinsurance 


The relevant publications can be found below under the heading "Preparations for the end of the transition period".

The negotiations on a free trade agreement began in March 2020 and are still ongoing. It is uncertain whether a free trade agreement will be concluded by the end of the transition period.

With regard to whether future cross-border financial services will be permissible under supervisory law in the new relationship between the UK and the EU, decisions will need to be made in many areas primarily on the basis of unilaterally recognising the “equivalency” of the other party’s supervisory regime. The analyses required in preparation for these decisions are also still ongoing at present.

Legal framework