Central Bank To Directly Control Investment Banks In EU
Zacks Investment Research | Dec 21, 2017 04:47AM ET
Per the announcements made by the European Commission, large foreign investment banks in the European Union (EU) will now face tougher regulatory regime and would be brought under the direct control of the European Central Bank (ECB).
Until now, market regulators were responsible for supervising banks, which will now be done by the central bank. In the opinion of the Commission’s vice president, Valdis Dombrovskis, "The new rules will support well-functioning capital markets, while ensuring financial stability. At the same time, larger firms posing similar risks as banks should be regulated and supervised like banks."
The regulatory body is planning to get large institutions that have assets of more than 30 billion euros under stricter regulations and easing the regulations on smaller firms. Thus, banking giants like JPMorgan (NYSE:JPM) , Citigroup (NYSE:C) , Goldman Sachs (NYSE:GS) , Deutsche Bank (NYSE:DB) , Credit Suisse (NYSE:C) and Morgan Stanley (NYSE:MS) might face tighter scrutiny.
In fact, all big banks are trying to shift operations outside of Britain so that they can continue serving their customers post Brexit in March 2019 too. However, the ECB has made it clear that they can’t set up small offices in London and keep serving their clients. According to the ECB, the banks will have to maintain full-fledged offices if they want to serve the clients post Brexit.
Of the above-mentioned major banks, JPMorgan, Citigroup, Goldman Sachs and Deutsche Bank carry a Zacks Rank #3 (Hold). You can see Zacks Investment Research
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