The European Banking Authority (EBA), Europe’s banking watchdog, will need to leave its London home in Canary Wharf after the UK leaves the European Union. The bids are all in from eight European cities, each vying to become the new seat of the EBA. The contenders are Dublin, Frankfurt, Paris, Prague, Luxembourg, Vienna, Warsaw, and, intriguingly, Brussels, writes Dmitry Leus.
The application from Brussels seems to be supported by those who are trying to pitch a compromise candidate to avoid a politicised wrangle between the usual heavyweights such as France and Germany as they each push for their own candidates, Paris and Frankfurt. Of course Brussels has historically been the go-to compromise city. EU institutions are based there in part for that reason – that Brussels is in neither France nor Germany. But is a banking authority really appropriate terrain for this compromise approach? The only valid and practical factor in support of Brussels candidacy is that a Brussels location would give the EBA proximity to the Commission, with whom the EBA would presumably have to cooperate quite frequently with on regulatory matters.
It is a challenge to come up with many other reasons in favour of Brussels as a location for the EBA. Brussels is overloaded with institutions, from the European Parliament to the Council and the Commission. It seems difficult to argue that Brussels should host yet another institution purely on the grounds of compromise.
Frankfurt seems to many to be the most natural fit. This city is already home to the European Central Bank, as well as a sister agency of the EBA. Frankfurt is also the destination for those specific operations of several banks that require ‘passporting’ – we have seen announcements from banks from Nomura to Citigroup that they will move people to Frankfurt, albeit small, specific teams.
But perhaps it’s time for a bolder move? Ten countries from Central and Eastern Europe have joined the EU since 2004 and yet they are barely represented in terms of hosting EU bodies. Maybe this is a factor in Prague’s favour? They seem to have presented a credible bid and they include their experience of hosting the European Global Navigation Satellite Systems as proof of their readiness to play such a role. They are so eager to host the EBA, the Czech Republic is offering new purpose-built headquarters and the government will pay the rent for the first five years. The other Eastern European Capital bidding to host the EBA is Warsaw, but neither Prague nor Warsaw are in Eurozone countries, which may hamper their bids.
Certainly it does not seem fair or convincing that Brussels should be chosen simply because it’s a compromise candidate. Banking does not seem the realm for compromise candidates. Hopefully the Council of Europe will vote with more rigour than that.
Dmitry Leus is a London-based entrepreneur and banking and financial services professional. His previous positions include Chairman of the Russian Depository Bank. In 2006 he founded Zapadny Bank, where he worked as Chairman until late 2013.
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