July 24, 2020 / 10:05 AM / 18 days ago

EU cuts red tape to help COVID-hit companies raise funds faster

LONDON, July 24 (Reuters) - The European Union proposed quick fixes on Friday for companies to raise funds faster as they recover from the COVID-19 crisis, leaving Britain to decide whether to follow suit.

The measures, some temporary, cut the cost of prospectuses for companies issuing more shares and help banks offload poorly performing loans more easily, to free up balance sheets and lend more. [FACTBOX LINK]

It follows a package of quick fixes for banks that was approved in June in record time.

“We would be aiming that those changes would need to be adopted and starting to apply by the end of the year,” the EU’s financial services chief, Valdis Dombrovskis, told reporters. “It needs to move fast.”

The banking package could generate billions of euros in additional lending, but commission officials say the amendments to securities rules were aimed more at cutting red tape by saving time and human resources that could now be devoted to dealing with the pandemic.

Britain, Europe’s biggest financial centre, has already left the EU, but under transition arrangements will continue observing EU rules until the end of December. Direct access for its financial markets to the EU will depend on its rules being as robust as the EU’s.

“We must see whether the UK is also applying these changes,” Dombrovskis said.

Given the amendments simplify and ease access to finance, “I would imagine it would be a benefit for the UK economy”, he added. Otherwise, Britain would end up with stricter requirements than the EU.

Some of the reforms now being eased had been pushed for by Britain when it was an EU member.

Brussels is not due to decide on whether to grant financial market access for Britain until autumn, Dombrovskis said. He has already said that UK clearing houses would be given temporary EU access from next January but declined to specify the period.

Reporting by Huw Jones, editing by Larry King

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