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The Bank of Portugal (BdP) announced yesterday that it will cancel the license of all UK financial institutions operating in Portugal, following the new rules imposed by the Brexit agreement. Almost 600 financial service providers are at stake, the official central bank source told Dinheiro Vivo.
At this moment, there are almost 600 entities based in the United Kingdom authorized to operate in Portuguese territory under the community passport regime ”, quantifies the Bank governed by Mario Centeno.
“Almost all these institutions (credit institutions, electronic money institutions and payment institutions) operate in Portugal under the freedom to provide services, and do not have a physical presence in Portuguese territory”, that is, they provide services remotely, virtual.
If the almost 600 entities affected do nothing and if they do not proceed with new requests to continue selling services in Portuguese territory, but now respecting the new post-brexit rules, will be prohibited in the market as of January 1, inclusive.
“The identification [das entidades em causa] can be consulted in the list of authorized institutions available on the website of the Bank of Portugal“adds the same source.
Yesterday, the central bank announced that Banks, funds and other financial entities that have their headquarters in the United Kingdom and do not submit said new application for registration to the Bank of Portugal to continue operating in the country (opening, for example, a subsidiary or branch) will be without authorization to do business in portugal following the signed agreement that dictates the conditions for the United Kingdom to leave the European Union (EU). The same will happen in other EU countries, of course.
According to the Bop, “on December 31, 2020, the transition period provided for in Article 126 of the Agreement on the Exit of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Energy Community ends. Atomic “.
Thus, “once the transitional period is over, the right to European Union it is no longer applicable to the United Kingdom, which includes the regime applicable to the provision of services and the exercise of activities in Portuguese territory ”.
“Payment institutions and electronic money institutions can still operate in Portugal through contracting agents or electronic money distributors,” BdP recalls.
It follows from the new agreement that “the departure of the United Kingdom from the European Union implies that entities based in that State cease to enjoy freedom of access to the Union market (establishment of a branch and freedom to provide services, as well as via networks of e-money agents or distributors), as the UK has since become a third country from the perspective of the European Union. “
The 600 entities in question have only continued to operate until now because there has been “a transition period”. which allowed “the extension of the current rules of access and exercise to the market until December 31, 2020”, recalls the national central bank.
But, as mentioned, it is not because of Brexit that UK banks, funds and investment houses will be pushed out of Portugal forever.
Centeno offers solutions to the problem
The BoP explains that there are solutions. “Entities interested in continuing to operate in national territory, including through the development of a new regulated activity (with the signing of new contracts with clients), must submit the corresponding authorization requests to the Bank of Portugal, paying special attention to the regulations on deadlines “.
A bank or credit institution based in a third country (such as the United Kingdom, for example) that intends to operate in Portugal can “constitute a subsidiary” by submitting a new application for authorization and registration with the Banco de Portugal “and complying with the that is foreseen in the General Regime of Credit Institutions and Financial Companies (RGICSF).
“The authorization processes for the constitution of a credit institution last 6 months, starting from the date on which Banco de Portugal receives all the elements and information necessary for the investigation of the process, the duration of which may never exceed 12 months from the date of initial delivery of the order “.
“Although the application has been submitted to the Bank of Portugal, the European Central Bank is the competent authority to grant authorization to credit institutions, within the scope of the Single Supervisory Mechanism.”
Banks and other financial institutions based in the United Kingdom may also request “to establish a branch, under the” European passport “regime, in the case of having a subsidiary in the European Union or in a State belonging to the European Economic Area”.
There is also the option of requesting to open a simple branch.
Finally, the British financier may also request “to exercise an activity under the freedom to provide services, in the case of having a subsidiary in a Member State of the European Union or in a state belonging to the European Economic Area”.
The procedures and rules necessary to obtain new authorizations to trade in Portugal in the case of “investment companies” and “payment institutions and electronic money institutions” are similar, in some cases the same.
The most frequently asked questions and answers on this topic can be found on a dedicated page on the Banco de Portugal website.
Luís Reis Ribeiro is a journalist for Dinheiro Vivo
