PARIS, Nov 3 (Reuters) - France’s Societe Generale said on Friday that it would apply for a third-country branch licence with the UK financial regulator by early next year so it can continue to operate there after Britain leaves the European Union.
Many European banks, including SocGen’s French peer BNP Paribas, currently operate some of their sizeable activities in Britain through a branch structure, which requires lower capital requirements.
Societe Generale currently uses its EU licence to operate in Britain, and is hoping it can use a third country branch licence after Brexit rather than set up a full subsidiary which would be more expensive.
However, it is not clear if that will be a long-term solution for the bank. The head of Britain’s Prudential Regulation Authority Sam Woods said in September that the regulator would also decide by Christmas if branches of some European Union financial firms in London must convert to subsidiaries and be directly supervised by the PRA.
In this case, EU banks would have to reinforce their London operations with fresh capital.
“Our central scenario is to have a third-country branch, so we do not plan to have a recourse to a full subsidiary,” Didier Valet, SocGen’s Deputy Chief Executive Officer, in charge of global banking and investor solutions, told journalists.
The Bank of England expects 130 financial firms from across Europe to apply for licences to continue operating in Britain after Brexit.
SocGen said it had till early 2018 to file the branch application, as it would take around 12 months for the regulator to review it. (Reporting by Maya Nikolaeva; Editing by Rachel Armstrong)