Citi becomes first U.S.
bank supervised by ECB since Brexit vote
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[November 21, 2016]
By Francesco Canepa
(Reuters) - The U.S. bank Citi on Monday became the first global
lender to come under European Central Bank supervision since Britain's
vote to leave the European Union - an option several UK-based companies
are exploring to keep their access to the single market.
Banks are looking for ways to ensure they can easily sell their services
into the EU, a market of 450 million people, after Britain leaves. One
option is to shift enough assets to a euro zone country to qualify for
Citi's Irish unit, Citibank Holdings Ireland, was added to a list of
large banks directly supervised by the ECB on Monday, after it expanded
its balance sheet through last year's merger with UK-based Citibank
The merger predates the June 23 Brexit referendum, but Citi's move will
still be closely watched by competitors weighing a move to the euro
Goldman Sachs <GS.N> is considering shifting some of its assets and
operations from London to Frankfurt and ECB board member Sabine
Lautenschlaeger said last week several banks are talking to the central
bank about similar moves.
Citi itself has said it might have to re-allocate certain businesses to
the EU, but it would not "hot foot" it out of Britain.
The Irish subsidiary houses Citi's retail banking operation in Europe
and has around 46 billion euros ($48.93 billion) in assets. But it could
not accommodate Citi's brokerage or trading businesses.
Under U.S. regulation, those must be housed in entities separate from
deposit-taking operations. Consequently, Citi's brokerage and trading
are a separate operation, based in London.
"This is an important milestone for Citi in Europe and we look forward
to a strong engagement with the (ECB)," Citi said in a statement after
passing an ECB health check earlier this month.
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Euro zone banks with assets of less than 30 billion euros are generally
supervised by national authorities, unless they meet other criteria,
such as being one of the three largest lenders in their country.
The total number of "significant" banks directly supervised by the ECB
fell to 127 from 129 after a merger and two restructurings.
Italy's Banca Mediolanum <BMED.MI>, which had also passed the ECB health
check along with Slovenia's Abanka, was not added to the list because
its assets have since fallen, chief risk officer Massimo Rella told
The ECB, which has the power to reject the acquisition of holdings in
any bank in the euro area, has opposed former Italian Prime Minister
Silvio Berlsuconi's owning a significant stake in Mediolanum through his
Fininvest holding company.
($1 = 0.9401 euros)
(Additional reporting by Anjuli Davies and Rachel Armstrong in London,
and Maria Pia Quaglia in Milan, editing by Larry King)
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