Barclays is preparing to pull the trigger on no-deal Brexit plans to shift assets worth £166bn (€190bn) to its Irish division as it “cannot wait any longer” amid continuing political uncertainty, a High Court judgment has revealed.
The plans were drawn up by the bank in case of a no-deal scenario which would see UK financial services firms losing “passporting” rights that allow them to provide services across Europe.
Details of the move were revealed in a judgment by Mr Justice Snowden that largely approved the “huge” transfer, which will apply to thousands of clients of the bank.
It said: “Due to the continuing uncertainty over whether there might be a no-deal Brexit, the Barclays group has determined that it cannot wait any longer to implement the scheme.”
The judge added: “On any view, the scale of the transfer of business… is huge.
“The scheme will apply to about 5,000 clients… and on the basis of the accounts for 2017 it is estimated that about €190bn of external assets will be transferred.”
The transfer represents a significant portion of Barclays group’s total assets of £1.1tn (€1.26tn).
The High Court judgment was published on Tuesday, on the same day the prime minister won support from MPs to return to Brussels and renegotiate her withdrawal agreement with the EU.
Business groups remain frustrated at the continued uncertainty, with CBI director-general Carolyn Fairbairn describing renegotiation as a “throw of the dice”.
She added: “Until MPs can agree a solution, the threat of no deal will continue to drain money from the UK.”
Financial services companies have been planning for how to cope with losing passporting rights to do business across the remaining 27 EU member states, through alternatives such as recognising “equivalence” between UK and European rules have been mooted.
A number of banks have responded by shifting parts of their businesses to EU countries including Ireland and France and in some cases shifting hundreds of staff.
Barclays’ plan to transfer assets to Ireland is “based upon the assumption that there will be no favourable outcome of the current political negotiations between the UK and the EU as regards passporting or the grant of equivalence status to the UK in respect of financial services”.
It covers clients of two companies within Barclays group that are currently based in the UK and provide corporate, investment and private banking services as well as operating branches in Germany, France, Spain, Italy, the Netherlands, Portugal and Sweden.
That is a separate business from Barclays’ domestic retail, business, and wealth and investment banking businesses in the UK, which have been “ring-fenced” under regulations introduced following the aftermath of the financial crisis.
The transfer covers clients selected on the basis that, after Brexit, European authorities might take the view that Barclays “no longer had any authorisation to carry out” banking activities on their behalf.
The clients’ identities have been stored on a USB memory stick held by Barclays’ solicitors Clifford Chance, according to the court judgment.
The judgment revealed that Barclays had been planning to put the scheme into effect in time to transfer its Spanish arm by 1 February though the timetable was described as “unrealistic” by the judge.
Some details of Barclays’ contingency plans were first reported last summer but the latest court judgment makes plain that the bank is now taking steps to finalise the move.