The UK’s largest financial services company could be forced to leave the European Union, according to a report by the Financial Times.
The FT claims the British banking industry could be affected by Brexit and is already in talks with the European Commission to discuss the possibility of joining the bloc.
The newspaper said the British Financial Services Authority (FSA) was in talks to find a way to protect British banks and its reputation in the EU.
“We are not opposed to the possibility, but it is a very difficult and complicated one,” said Peter Clarke, a former senior European Commission official.
The Financial Times reported that a new Financial Services Directive could be introduced to limit EU regulation, while the UK Government is set to seek a trade deal with the EU after Brexit.
However, the Financial Services Association has expressed doubts that such a deal could be possible after Brexit, the FT reported.
In addition, the UK Treasury could decide to refuse to sign any deal with any other EU member state, according the report.
The FSA said it had received “very few proposals” for a new EU directive after Brexit but that it was looking at options for “ensuring that the banking sector continues to be in Europe.”
The FSA did not respond to a request for comment.
The UK Financial Services Industry Association (FSIA) said it was “very keen” to have talks with Europe, but said there were no concrete proposals.
The FAI, the main lobby group for the UK financial services sector, has been pushing for a Brexit deal since the end of last year.
The association said that its members were “concerned about the negative impact on the UK economy if we lose the free trade area and we don’t want to get involved in any deal that would weaken the UK banking sector.”
The FT reported that the FSA had been approached by the European Central Bank to provide advice on whether to sign up to a new trade deal after Brexit if it was a “safe option.”
The EU has been trying to renegotiate its current trade deal, the Transatlantic Trade and Investment Partnership, which is due to expire on Dec. 31.
The EU is also pushing for the deal to be extended beyond 2019, which would mean a deal is likely to be signed after the next election in May 2019.
The European Parliament, the bloc’s executive body, has rejected the extension, arguing that Britain’s departure from the EU would have an adverse impact on EU member states.