Davos WEF
Davos WEF

Banks quitting London won't impact Europe's financial stability: Bundesbank's Dombret

Banks relocating due to Brexit should not be an issue: Deutsche Bundesbank board member

Banks pulling out of the U.K. post-Brexit would not impact Europe's financial stability, according to a top official at Germany's central bank.

Several lenders in the U.K. are reportedly exploring the possibilities of relocating at least part of their businesses operations to other European cities in order to maintain their services throughout the bloc.

"What we are interested in is that the single rule book prevails and that it doesn't really matter from a financial stability point of view whether banks who want to relocate, relocate to Frankfurt, Amsterdam, Paris or Dublin... it should make no difference," Andreas Dombret, a member of the executive board at Deutsche Bundesbank told CNBC on Friday.

"I'm pretty convinced there will be not one winner but there will be some sort of fragmentation in the relocation. We expect actually, and I personally expect, for those banks who do want to relocate to make a decision in the first half of this year," he added.

UBS, HSBC and Goldman Sachs have all warned that jobs and business operations may have to move away from London after Brexit. Dombret stressed he was confident financial markets would be able to adapt to the changes, should they occur, and that euro zone companies would not be disturbed.

Frankfurt not being advertised

Anthony Kwan | Bloomberg via Getty Images

Lenders seeking to retain a European Union (EU) financial "passport" post-Brexit appear to be left with one fewer option after U.K. Prime Minister Theresa May confirmed the country is destined to leave the single market. London-based banks could establish a subsidiary link within the EU that does have passport rights however complex regulatory rules – as well as capital concerns – appear likely to prove problematic.

"I do understand why many banks are visiting supervisors, like myself, on a regular basis trying to find out what would we have to expect should we relocate let us say in that case to Frankfurt," Dombret told CNBC.

"So I have had a number... a significant number of visitors on this topic and we are talking to everybody but we are not advertising our financial center, at all," he added.

U.K. Prime Minister Theresa May is expected to trigger article 50 and begin formal negotiations to break from the EU before April.

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