LONDON, Sept 18 Banks in Britain are the largest
borrowers and lenders of euros outside the single currency area,
BIS figures showed on Sunday, underscoring what's at stake for
Britain if its lenders fail to maintain access to EU markets
after the country leaves the bloc.
The Bank for International Settlements (BIS) said in its
Quarterly Review that Britain's vote in June to leave the
European Union has focused attention on the role of London in
the European and international banking system.
The forum for central banks gave no views on how the City of
London, one of the world's leading financial hubs and single
biggest tax earning sector for the UK, would fare after Brexit.
French President Francois Hollande has said that
euro-denominated clearing should shift to the euro zone, a
sector that clearing houses in London dominate.
Banks in Britain are already making contingency plans to
shift staff and operations to the EU in order to keep serving
continental clients if Britain loses full access to the bloc
under new trading terms that could take years to negotiate.
The BIS figures highlight London's huge global footprint in
finance, much of it in euros.
At the end of March, banks in the UK reported total
cross-border lending worth $4.5 trillion, ahead of Japan and the
United States. Britain was the second-biggest recipient of cross
border bank credit at $3.8 trillion, behind the United States.
A large share of international banking activity in London is
accounted for by banks from other countries with affiliates in
Among foreign banks in Britain, American banks reported the
largest outstanding foreign claims on Britain at $460 billion.
Banks collectively from EU member countries, however, had
claims totalling $1.3 trillion or 56 percent of all foreign
claims on UK residents.
"The United Kingdom has a particularly important role as a
redistribution hub for euro-denominated funds," the BIS said.
Banks in Britain accounted for 54 percent of all worldwide
euro-denominated claims booked outside the euro area, and 60
percent of all liabilities.
"Indeed, ever since the launch of the single currency,
euro-denominated positions have been a major part of the
cross-border portfolios of banks located in the United Kingdom,"
the BIS said.
During the 2000s, the share of the euro in cross-border
claims at banks in Britain hovered around 40 percent, roughly
equal to the share of claims denominated in dollars.
Since 2012, the euro's share has fallen from 39 percent to
33 percent at the end of March this year.
London is also the world's biggest currency trading centre,
accounting for some 37 percent of the $5.1 trillion average
daily volume, according to the BIS. Traders in London buy and
sell more than twice as many euros as the whole 19-member euro
To see the BIS review, click on:
(Reporting by Huw Jones; Editing by Jamie McGeever and Hugh