Banks are not yet prepared for a “no deal” Brexit and must act now to avoid putting the stability of the financial system at risk, according to the European Union’s top regulator.
In an opinion published Monday, the European Banking Authority said that preparation for a scenario where Britain crashes out of the European Union without an agreement on how to manage future ties has been “inadequate.”
“The necessary mitigating actions take time, and should be pursued without further delay,” the regulator said.
“Financial stability should not be put at risk because financial institutions are trying to avoid costs.”
There are just over nine months to go before Brexit, but Britain has not yet secured a deal that eliminates the risk of an abrupt departure from EU arrangements that allow banks and businesses to trade freely across Europe.
The regulator warned that banks cannot assume such an agreement will materialize.