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Luxembourg stakes claim for EU banking body post-Brexit

Luxembourg has claimed the legal right to host the London-based European Banking Authority after Brexit, a government spokeswoman said on Thursday.

Citing a European Union law dating back to 1965, Luxembourg Prime Minister Xavier Bettel made his case in a letter to EU Council President Donald Tusk and European Commission head Jean-Claude Juncker, the spokeswoman said.

Bettel’s letter is dated Wednesday, the same day that Britain’s own letter to Tusk officially notified the EU that the UK intended to leave the bloc.

“Luxembourg’s claim to host the EBA is nothing more than the implementation of this agreement that is still valid today,” the spokeswoman told AFP.

“We want the 1965 decision to be respected and therefore claim that the EBA’s new host should be Luxembourg.”

The move fires the opening shot in what will certainly be a furious battle by EU countries to claim UK-based Brexit spoils.

Up for grabs also is the case for the European Medicines Agency (EMA) and its London staff of 900, including pharmaceutical experts, biologists and doctors from every corner of Europe.

The EBA is perhaps best known for its regular stress tests on the EU’s financial sector, which have become a vital focus for investors and regulators in the wake of the global financial crisis.

Member states “are willing to locate in Luxembourg, or to transfer thererto, other community bodies and departments, particularly those concerned with finance,” Bettel’s letter quoted the law as saying.

– ‘Really wide interest’ –

But media reports suggest that cities including Amsterdam, Dublin, Frankfurt, Paris and Vienna are also trying to woo the EBA away.

Germany’s powerful Finance Minister Wolfgang Schaeuble last week said he would plead strongly to have the EBA based in Frankfurt.

Luxembourg believes that the 1965 law stipulates that any decision to locate an economic institution of the EU elsewhere than Luxembourg requires a special exception.

This was granted to Britain in the case of the EBA, now in London, and Germany for the European Central Bank, which is based in Frankfurt.

Luxembourg already hosts the European Court of Justice as well as the European Stability Mechanism, the eurozone rescue fund that plays a leading role in the Greek debt crisis.

EU ministers are also bound by law to hold their regular monthly gatherings in Luxembourg three times a year, instead of the usual Brussels.

The London headquarters of the European Union’s EBA financial regulator, in the Canary Wharf district, has 170 staff.

Britons voted in June to quit the EU bloc in a referendum that sent shockwaves across the globe and prompted several banks to announce plans to move jobs from London to continental Europe.

The EBA refused to comment on the latest claim.

Last week, executive director Adam Farkas told AFP of the “really wide interest from European capitals who expressed their desire or intention to host us.”

“We do not have a formal role in deciding this,” Farkas said, adding that it would be up to the EU governments, commission and European parliament to decide.