Subsidiaries enable local regulators to seize control of failing banks rather than leaving their fate to the discretion of their parents’ supervisors. But compelling more banks to set up such units is likely to be unpopular with the industry, since full-blown subsidiaries are more expensive than merely maintaining branches in the UK.
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Bank of England considers forcing foreign banks to replace branches with subsidiaries
“The ability to utilise branch structures is an important part of what makes London a successful and connected international financial centre,” said Giles French, chief executive of the Association of Foreign Banks, which represents close to 200 foreign banks doing business in the UK.
