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“Ah yes, my favourite topic. I’ve been enjoying it so much — the discussion before and after 2016.”
European Banking Federation chief executive Wim Mijs’s voice drips with sarcasm as our conversation begins — with Brexit.
“Yes, it’s still relevant. Yes it’s still happening,” he says. It might be nearly eight years since the UK voted to leave the EU, but he has a point.
London has regained its position as the top European trading venue from Amsterdam — after a brief post-Brexit surge from the Dutch capital. However, European exchanges are still scrapping for slim pickings from listings and big banks continue to shift more people and resources to cities on the continent. Consultancy EY estimates that 7,000 jobs have shifted from the City to the EU since the Brexit vote.
The rifts in Europe’s banking sector are arguably greater than they ever have been. The UK has ditched the bonus cap that applies in the bloc. Britain and the EU are working towards different time-frames on Basel III capital rules. EU crypto regulations have left the UK in the dust.
Major lenders are shifting resources to the bloc, as a result of both new opportunities emerging and the European Central Bank’s ‘desk-mapping’ project. The latter of these requires most banks to move more employees to the EU. Debate also rages over whether the EU will have to extend clearing equivalence again.
It’s a lot for the chief executive of the organisation that brings Europe’s banking trade bodies together to get his head around. He particularly struggles to understand why London would want to break away from the bloc — a move he describes as a “mutually destructive” decision for Europe’s capital markets.
“In my view, London had developed itself as the financial centre of Europe. It is from a bankers’ perspective very strange that it cuts itself off from its biggest market. You can imagine that I was not a big believer in Brexit,” Mijs says.
“That started a bit of a discussion about if London can maintain its position as a global financial centre and, of course, about the ambitions of Frankfurt, the ambitions of Paris, even the ambitions sometimes of Amsterdam. If you now look at it a few years later, we are still at it.”
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Trying to represent the interests of an entire continent is like walking a tightrope — just ask the European Fund and Asset Management Association, which had to revamp its governance structure after rifts between members emerged last year.
Mijs was a law student who went on to work at The Hague before joining ABN Amro as head of government affairs, so he knows a thing or two about how to influence policy. He says a lot of Brexit’s political heat has died down, but he is still concerned about fragmentation between Europe’s lenders. The EU still can’t form a banking or capital markets union, for example, much to Mijs’s and many other EU officials’ frustration.
“MiFID was the result of a close EU compromise,” he notes. “It doesn’t surprise me that now you get divergent regulation. So this is a concern. This is a continuous concern on equivalence because what you want is that it stays as close as possible to the original.”
He is also not surprised that the UK decided to ditch the cap on banker bonuses it inherited from the EU and is no longer constrained to payouts of twice base salary.
“I do understand that if you want to be globally competitive in a market that in essence is also a global labour market, you need to do something about it,” he says. “The logical strategy from Brexit — at least, what I would do if I were the City of London — is say: ‘Okay, our politicians have cut ourselves off from our main market, so what are we going to do to stay competitive in a global market?’ You start looking at regulation, but you also start to look at whether you are attractive for outside labour.”
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Having now been chief executive of the EBF for a decade, the father of two’s passion for the job shows little sign of fading. For example, the EBF plans to continue campaigning on tweaks to the Basel III Endgame incoming capital rules for banks. Even though he is “relaxed” about their impact, he says, Mijs wants the continent to stay competitive.
He will also be keeping a close eye on how banks adopt AI. Chatbots are still “pretty stupid”, he says, and “your risk management is only as good as your algorithm”. However, he recognises the technology is “almost everywhere” in today’s lenders.
Mijs says he is “not a big believer in big tech rolling in and taking over everything”, but that speed and dynamism is what keeps someone with 31 years of banking experience motivated.
“I’m still enthusiastic about it because the changes are vast. Banking is dynamic because if it works well, it follows society and the economy correctly… If I go back to 2014, most of it was still the fallout of the financial crisis and the rebuilding of the social contract with society. Now, thankfully, we are talking about new business and the future.”
He admits banks started over-leveraging in the early 2000s and there was “immense” pressure to maximise profits and shareholder returns. But now the pendulum has swung back, he says, with banks realising their vital economic role again.
“What I see now is the current generation of bankers I meet — one of the fun parts is that you get to look into the kitchens of different institutions — they are very close again with society, very conscious of their connection. That is quite a cultural change.
“Non-executives often ask: is it still fun to be a non-executive director in a bank, because of the relatively low remuneration, an incredibly intensive and complex time involvement, and a high level of liability? But I hear CEOs saying: ‘I find it such a dynamic business, I would be a CEO of a bank any time.’
“It’s the changes, the constant intellectual challenge. It’s still fun.”
CV
Born
1964
Education
1983-1990
Master of Laws, Leiden University, the Netherlands
Career
2014-present
CEO, European Banking Federation
2011-16
Chair, International Banking Federation
2007-14
CEO, Netherlands Bankers’ Association
1993-2007
Senior vice-president, head of government affairs, ABN AMRO
To contact the author of this story with feedback or news, email Justin Cash