The European Central Bank (ECB) wants to force international investment banks serving European customers from London to move more staff to EU member states. According to the head of banking supervision Andrea Enria, after Brexit, too many large financial groups are still working mainly from the British capital for customers in the euro zone. This is a problem because after Britain leaves the European Union, the same rules no longer apply automatically to banks.

After Brexit, many banks with offices in London, a major financial center around the world, moved staff to cities within the EU so that they could continue to serve customers in the bloc. But according to Enria, that alone wasn’t enough. He announced in a blog that the ECB wanted to issue a “binding decision” with major understaffed investment firms in countries overseen by the central bank. This mainly involves appointing staff experienced enough to manage risk in each of the bank’s departments. The ECB may ask the bank to appoint a department head in the euro zone with clear rules on how he reports.

According to Enria, the steps to be taken by the ECB are completely new, because never before in such a short time so many financial institutions headquartered in countries outside the euro zone have been placed under the supervision of the central bank. Therefore, he favors seeing which steps are required for each bank with a large London branch.

According to Enria, an inventory of 264 departments of seven investment banks traded on financial markets shows that most risk management still takes place outside the eurozone. One in five so-called trading desks in the eurozone work with an identical department outside the currency union that covers some or all of the risk of trading activity. That became a problem, because then there was no ECB oversight. In addition, 70 percent of the investigated departments used a method in which they did not assume the risk themselves, but transferred it to another department or an external party. That approach is controversial.