On 12 September 2019, the Joint Committee of European Supervisory Authorities published the latest report on the risks and vulnerabilities to the EU financial system in the event that the UK and EU fail to reach a withdrawal deal on Brexit. The report highlights that the EU’s banking, insurance, pensions and securities sectors continue to face a significant risk.
In light of the ongoing uncertainties, especially those around Brexit, supervisory vigilance and cooperation across all sectors remain significant.
The report stresses the need for the public and private sectors to prepare for the impact of a no-deal Brexit on financial activities especially in light of the postponement of the Brexit date. While the report acknowledges a degree of “Brexit fatigue” in the financial sector, supervisors continue to encourage institutions to prepare contingency plans for a no-deal and have themselves set further steps in motion to minimise negative impact on financial markets.
Some good news in this regard is that in the event of a no-deal Brexit, the existing ESMA-coordinated Memoranda of Understanding between UK authorities and European securities regulators, will help to avoid some cliff-edge risks.
The joint committee comprises the European Banking Authority (EBA), European Securities and Markets Authority (ESMA) and European Insurance and Occupational Pensions Authority (EIOPA), collectively known as the European Supervisory Authorities (ESAs).
The joint committee report can be found here.
ESMA’s news release can be found here.