Germany willing to extend EU rights to UK banks to avoid disorderly Brexit

Germany is attempting to avoid a disorderly Brexit that will generate market turmoil in Europe by offering a last minute lifeline to UK banks and allowing them to maintain their EU rights after the divorce.

Chancellor Angela Merkel’s cabinet approved new rules on Wednesday that would allow Germany’s financial regulator Bafin to put in place transitional arrangements for UK banks and insurers so as to maintain order after Brexit.

According to Bloomberg, the new arrangements would let them keep their passporting rights through 2020 but will be granted as extensions by Bafin on a case-by-case basis.

Germany is also easing job-security rules for senior financial executives at large, system-relevant firms.

“We don’t have much time, but we do still have a little bit of time [for an orderly Brexit],” Merkel said. “The only thing I can tell citizens in Germany is that we’re working hard on ensuring an orderly Brexit and that, in parallel, we’re preparing for the eventuality that it won’t be orderly."

Germany is particularly concerned about the effects a hard Brexit may have on their export-oriented economy. According to Reuters, an uncertain environment in the wake of a disorderly Brexit would result in companies and consumers holding back on major spending.

With the announcement of a leadership contest against Prime Minister Theresa May on Wednesday evening, there is an increased probability of a no-deal scenario.