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Responding to Brexit in the Financial Services Industry

Deloitte Whitepaper on regulatory requirements

The Deloitte Whitepaper "Responding to Brexit in the Financial Services Industry" outlines the key requirements, credit institutes and investment firms need to take into account, in order to maintain access to the European Internal Market after Brexit.

Responding to Brexit in the Financial Services Industry

The United Kingdom will leave the European Union (EU) and several credit institutions in 2019 and investment firms still need to finalise their Brexit-projects to establish a third country branch or subsidiary in the EU to be able to access the European Single Market after Brexit.

As key regulatory requirements for CRR credit institutions and investment firms are generally comparable, institutions tend to underestimate the implementation efforts of the proposed target operating model (TOM) and the corresponding regulatory requirements in Germany. Even though the overall regulatory requirements might not be new to the institutions, differences in the local supervisory details and priorities must be considered. Therefore, a key challenge for these institutions is to identify the regulatory differences between Germany and UK, and to ensure compliance with the local requirements as part of their implementation project. A simple “copy and paste” transfer of existing processes and procedures from the UK entity to the new entity in Germany most likely would not fully be in compliance with the various local regulatory requirements and with the expectations of BaFin. Depending on the business model of a bank or investment firm, its IT infrastructure and its local risk management capabilities adjustments to the local TOM might become necessary.

Our White Paper addresses typical regulatory differences and implementation challenges that need to be considered in the context of founding a new bank or investment firm in Germany.

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