Brexit transition to end by December 2020

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Several large London-based financial institutions have already set up subsidiaries in the European Union to preempt the moment Britain leaves the bloc.

Indeed, far from freeing Britain from the EU at last - as British voters chose to do in June 2016 - the transition period appears to bind the country just as tightly to the continent while removing the influence it would have over European affairs.

There are 77 branches of banks from the European Economic Area in Britain - 23 of which have assets of around or above 15 billion pounds - plus 80 branches of insurers. More than 100 banks operating in London are branches of lenders headquartered elsewhere in the EU.

Catherine McGuinness, policy chairman at the City of London Corporation, said: "Allowing European wholesale banks to operate as normal in the United Kingdom after March 2019 is a welcome bit of news to end the year for the City".

It could also hurt public finances, as Britain collects over 70 billion pounds a year in tax from the financial services sector. France's BNP Paribas and Societe Generale have 6,500 and 4,000.

Branches offer an easy way for banks to move money around their worldwide operations.

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"The pressure we have seen against sterling today is largely reflecting remaining uncertainties around Brexit negotiations", said Alexandra Russell-Oliver, a strategist at Caxton FX.

European Union leaders gathered Friday to weigh progress in negotiations on Britain's departure from their club as they look for new ways to speed up the painfully slow moving process. It dominates the $5.1-trillion-a-day global foreign exchange market and hosts more banks than any other center. The EU has proposed that, as a last resort, clearing of euro denominated derivatives done mainly in London should move to the euro zone after Brexit.

Barnier was unveiling his new mandate just a few days after European Union leaders agreed last week that enough progress had been made on divorce issues - Britain's financial settlement, the rights of citizens hit by Brexit and the status of the Ireland-Northern Ireland border - to expand the negotiations for talks on future relations, including trade.

The BoE plans to start reauthorizing the branches of up to 200 EEA financial firms in Britain in early 2018.

The new policy will not affect banks from outside the EU.

The central bank is due to publish its approach to future supervision of foreign banks, insurers and clearing houses at 1300 GMT.

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