Message to banking sector clients regarding brexit1
Since 1 February 2020, the United Kingdom of Great Britain and Northern Ireland (United Kingdom) has no longer been a Member State of the European Union (EU). At the same time, the time frame between 1 February 2020 and 31 December 2020 was established as the so-called transition period, which in practice means that the United Kingdom remains subject to EU law and is treated as if it were still a member of the EU. However, representatives of the United Kingdom do not participate in the work of EU institutions.
The transition period is coming to an end, and 1 January 2021 will be the first day after its completion. The EU and the United Kingdom are currently negotiating an agreement on their future relationship, which is meant to be concluded before 31 December 2020. However, we are dealing with a politically-driven process and the final outcome of these negotiations cannot be predicted.
Regardless of whether an agreement for a framework for future UK-EU relations will be concluded or not, on 1 January 2021:
- the United Kingdom will become a third country (i.e. a non-member state),
- the United Kingdom will cease to be part of the European Economic Area (EEA).
This means that entities based in the United Kingdom and UK citizens will lose access to the EU internal market on the existing terms and conditions, including the right to enjoy the freedom of movement of goods, services, capital and persons within the EU under EU law. Similarly, EU citizens and entities based in the EU will lose access to the UK market on the existing terms and conditions, on the basis of the aforementioned freedoms guaranteed by EU law.
The above process will also result in changes in the use of banking services which, due to their cross-border nature, could be linked to the United Kingdom. The areas in which these changes may take place include in particular:
1. Payment area
- According to current knowledge, the United Kingdom will still be considered part of the SEPA zone, so clients of Polish banks will be able to make EUR transfers within the Single Euro Payments Area even after 1 January 2021. Until other guidelines appear (if any), SEPA settlements with the United Kingdom will remain unchanged.
- In transfer orders to banks located in the United Kingdom in all currencies, clients of banks in Poland will be able to choose any charging option: SHA, OUR or BEN2.
- The consequences of brexit may be changes in the fees for making foreign payments to the United Kingdom.
- According to Regulation (EU) 2015/847 of the EP and of the Council of 20 May 2015, 3as far as transfers from the EU to the United Kingdom are concerned, payment service providers must provide more detailed information on the payer and payee than that required for intra-EU transfers. In practice, this may result in the client's obligation to provide more detailed information.
2. Investments in the financial market
- Brexit is a politically-driven process with ongoing negotiations that goes beyond any previously established time frames, and this uncertainty may cause changes in exchange rates and valuations of financial instruments. At the same time, it cannot be ruled out that the mere fact that there is no cooperation agreement between the United Kingdom and the European Union alone may entail certain economic changes. These may include an increase in the volatility of financial instrument prices or exchange rate fluctuations which, when considering the relationship between the bank and its clients, may affect obligations arising from contractual arrangements.
- Brexit may also decrease the availability of investment services provided by entities from the United Kingdom or limit the availability of purchasing financial instruments traded on a regulated market located in the United Kingdom or in trading systems operated from the United Kingdom.
3. Additional information
- We would like to inform you that regardless of the client’s citizenship (EU or the United Kingdom) and place of residence, deposits with our Bank are covered by a guarantee of up to EUR 100,000 by the French deposit guarantee scheme - The Fonds de Garantie des Dépôts et de Résolution (the FGDR).
- In accordance with the transitional provisions contained in Article 51(5) of Regulation (EU) 2016/1011 of the EP and of the Council, regardless of the end of the transitional period, in financial agreements and financial instruments, it will only be possible to use benchmarks (such as LIBOR), which are provided by entities from the United Kingdom, on the terms and conditions set out in the above-mentioned regulation.
The bank monitors developments related to brexit and its potential consequences on an ongoing basis. If, during the brexit process, any events occur that may require appropriate action to be taken by clients, the bank will provide information about this in a separate message.
1 Brexit is the name used to describe the withdrawal of the United Kingdom from the EU.
2 The SHA option means that the fees and commissions due to the transferring bank are paid by the payer, while the costs of the recipient's bank and intermediary banks involved in the foreign transfer are covered by the payee. The OUR charging option means that the payer agrees to pay all the commissions and bank fees due for making the foreign transfer, including the costs of intermediary banks involved in the foreign transfer, while the BEN charging option means that commissions and fees of all banks involved in the foreign transfer are paid by the payee.
3 Regulation (EU) 2015/847 of the European Parliament and of the Council of 20 May 2015 on information accompanying transfers of funds and repealing Regulation (EC) No 1781/2006 (Text with EEA relevance), O.J. L 141 of 5.6.2015, pages 1-18.