# Brexit effect on Nationwide, Leeds, Ulster and Investec



## Lightning (13 Jun 2016)

Nationwide UK (Ireland), Leeds Building Society (Ireland) and Investec Irish Branch are all regulated by the UK FCA with 'passporting' regulation into Ireland via a branch set up. 

What happens if Brexit occurs?
- Can passporting still occur? My understanding is passporting is a EEA law as apposed to a EU law? so one would assume that passporting can still occur?
- The EUR equivalent of 75,000 GBP is protected via the FSCS. Will this deposit protection EUR based method be maintained if the UK is outside the EU? If GBP collapses after a Brexit, will the FSCS raise the protection level?
- Are there other effects to deposits with these 3 banks?
- How will Brexit effect RBS's Ulster Bank? With Bloomberg reporting, in December 2015, that RBS will review Ulster Bank again in 2-3 years, does Brexit make it more likely that RBS will dispose of Ulster Bank?


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## Jim2007 (13 Jun 2016)

CiaranT said:


> - Can passporting still occur? My understanding is passporting is a EEA law as apposed to a EU law? so one would assume that passporting can still occur?



The UK is not an EEA member in it's own right, it is a member by virtue of it's membership of the EU.  If article 50 is invoked, such a membership will naturally fall with it.  Furthermore it is very unlikely that the UK would apply for such membership in the event it voting to leave the EU as it would involve the same commitments and obligations.


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## Lightning (14 Jun 2016)

Thanks Jim. 

It the UK ends up being neither a member of the EU nor EEA one wonders how passporting, if permitted, will work.


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## thedaddyman (14 Jun 2016)

Ulster Bank recently changed their legal set up in ROI so they are now a Designated Activity Company. Not sure what the practical impact of that is. My own believe is that if the price is right, they may try and sell off Ulster ROI. However I can't see that happening until they have sorted out their Williams and Glynn disposal in the UK. By all reports the process of that spin off is costing RBS hundreds of millions due to the state of their IT systems.


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## Jim2007 (14 Jun 2016)

CiaranT said:


> Thanks Jim.
> 
> It the UK ends up being neither a member of the EU nor EEA one wonders how passporting, if permitted, will work.



Assuming the UK does exit, it is most likely that they will end up trading on WTO terms, in which case there will be no passporting 
and such firms will need to set legal entities that operate within the EU/EEA market.


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## Lightning (14 Jun 2016)

thedaddyman said:


> However I can't see that happening until they have sorted out their Williams and Glynn disposal in the UK. By all reports the process of that spin off is costing RBS hundreds of millions due to the state of their IT systems.



Some media reports previously said that the reason a PTSB and Ulster merger did not happen was due to the massive IT cost involved due to the state of the RBS systems. The Williams and Glynn experience adds weight to this, and if RBS cannot dispose of Ulster via a merger or sale to another bank due to the IT costs, then it reduces to methods by which RBS can dispose of Ulster Bank.


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## Lightning (14 Jun 2016)

Jim2007 said:


> Assuming the UK does exit, it is most likely that they will end up trading on WTO terms, in which case there will be no passporting
> and such firms will need to set legal entities that operate within the EU/EEA market.



Needing to set up a new legal framework might be enough to push the tiny Investec / NUK / Leeds Irish operations over the edge and cause them to shut their Irish deposit gathering operation.


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## ardmacha (14 Jun 2016)

Might there be any UK operations who choose to operate in Ireland to provide passporting throughout the EU?


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## Sharks (24 Jun 2016)

So now that Brexit has been voted upon, should I be worried about my deposit in NUKI?


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## tallpaul (24 Jun 2016)

Why should you be? Last time I looked the UK was still part of the EU. It will be a number of years before the UK becomes a Third Country and much negotiation and analysis has to take place in the intervening period.


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## Lightning (24 Jun 2016)

Yeah, your deposit is safe. 

What is uncertain is to what legal structure NUK, Investec and Leeds will operate under in Ireland post UK EU exit now that passporting will have to cease and whether they will maintain their Irish operation under a new legal structure.


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## Sarenco (24 Jun 2016)

Hi Ciaran

The Central Bank can authorise a branch of a non-EEA credit institution to operate in Ireland under Section 9A of the Central Bank Act 1971.  Credit Suisse currently operates in Ireland on this basis.

The Central Bank has even published guidelines on applying for authorisation under this provision:

[broken link removed]


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## Lightning (25 Jun 2016)

Hi Sarenco,

Absolutely, a non-EEA bank can operate here but there are hoops to jump through first.

The steps are:



> There are five principal stages in the authorisation process:
> 1. Holding of a preliminary meeting with the Central Bank;
> 2. Ensuring that the requirements set out in Sections 9A(3)(a) and
> 9A(3)(b) of the Act have been met;
> ...



This is a lot of hassle and work and time involved. Also, the CBI are far from fast at acting. Will Leeds, NUK and Investec deem it to be worth the hassle given the small size of their deposit gathering operation here?


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## Lightning (25 Jun 2016)

The FT today report: 



> *City could lose vital passporting rights after Brexit - top ECB official*
> 
> Britain's financial services industry is at risk of losing its vital right to operate a "passport" across the continent if it is no longer a member of the single market, one of the European Central Bank's top officials has warned.
> 
> In the first major comments from a European monetary policymaker following the UK's historic vote, France's Villeroy de Galhau said it was "paradoxical" to allow the City of London to operate by the EU's rules and not be a member of the European Economic Area in the manner of Norway.


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## Lightning (25 Jun 2016)

FT have published a more detailed article on the effects of the removal of passporting here. 



> “If you don’t have a [full EU] licence [outside the UK] then you *need to start work right away,*” said the head of investment banking at a large group.


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