Lloyds Banking Group (LON:LLOY) plans to operate three subsidiaries in continental Europe after Britain leaves the European Union, Reuters has reported. The news comes after it emerged earlier this year that the bailed-out lender had filed an application with Germany’s financial regulators to convert its Berlin branch into a subsidiary, which will enable it to keep its continental operations within the EU, unaffected by Brexit.
Lloyds’ share price has climbed marginally higher in London in today’s session, having inched 0.29 percent higher to 62.63p as of 09:43 BST. The shares are marginally underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.51 percent higher at 7,665.59 points.
Lloyds plans three EU subsidiaries
A person familiar with the matter told Reuters that Lloyds was planning to operate three subsidiaries in continental Europe post-Brexit. While the FTSE 100 group was widely expected to manage its continental business from a subsidiary in Berlin, the source explained that executives were now planning two further hubs to service customers across the EU. One is likely to be in Frankfurt and the location of the second has yet to be confirmed.
Plans partly due to ring-fencing rules
The newswire notes that Lloyds’ plan to run three continental units has partly been prompted by the new UK ring-fencing regulations which require British lenders to separate their retail operations from riskier investment banking. The source noted that to comply with these rules following Brexit, the bailed-out lender needs a second subsidiary to support its non-ringfenced euro bond trading business, with that subsidiary likely to be set up in Frankfurt.
Lloyds, however, is reportedly further seeking to establish a third subsidiary in an as yet unconfirmed location to support its Scottish Widows insurance business.