European Union banks in the United Kingdom will operate 'as normal' after Brexit

"But the real difficulties ahead lie when the British will ask for special system of regulatory alignment - they won't get it", he said.

A BoE spokesman declined to comment on the report.

The EU has proposed that, as a last resort, clearing of euro- denominated derivatives done mainly in London should move to the Eurozone after Brexit.

The development comes after European Union leaders last week signed off on the first stage of Brexit negotiations, ending more than a year of stalemate over Britain's bill for leaving the bloc, as well the fate of the Irish border and European Union expatriates.

The U.K. gesture could also soften EU Commission plans, due to be published later on Wednesday, to stiffen the conditions for letting investment banks from outside the EU operate in its market.

She told colleagues it was clear that the Government was seeking "a deal which secures the best possible trading terms with the European Union, enables the United Kingdom to set rules which are right for our situation and facilitates ambitious third-country trade deals", the spokesman said.

But they are still unclear on what Britain wants from the future relationship, including the shape of any trade deal. The BBC originally reported that it would, but removed that detail in a later version of its story.

In a hearing with MPs after the announcement, Carney cautioned: "Our presumption is consistent with the Government's objectives that we will continue to have a form of supervisory co-operation and information sharing with the European Union authorities after Brexit".

Europe-based banks operate in Britain through a network of branches, which offer an easy way to move money around a lender's global business, although they can also leave British customers exposed.

Carney told the Treasury Select Committee that it did not make sense to tell banks they must create subsidiaries, causing a "tremendous amount of cost and disruption", only to change the guidance if there is a co-operation agreement in the future.

Switching from being a branch to a subsidiary means having to build up buffers of capital and cash locally, and come under the direct supervision of the Bank of England.

Legislation meant to smooth Britain's exit from the European Union moves a step closer to becoming law on Wednesday, as ministers begin working out what they want from Brexit.


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