Authorities in the European Union (EU) are proposing steps to ease curbs on foreign banks in the bloc, Reuters reported, citing a document. 

The Czech EU presidency has put forth a proposal that branches of foreign banks that have reached a certain “systemic” threshold would not automatically become a subsidiary. 

In October last year, the European Commission, the executive arm of the EU, proposed rules to tighten the grip on how foreign banks can operate in the bloc. 

“In order to keep the consensus reached on the June compromise text, the Presidency does not propose an automatic subsidiarisation-requirement if the total assets of a TCB (third country branch) exceed a certain threshold,” the document seen by the news agency said. 

The presidency has also suggested that foreign banks in the 27-member EU should not be forced to keep “liquid assets” in a special account. 

Furthermore, it has proposed that there should be a wider criteria for classifying a foreign bank branch as “systemic” and converting it into a subsidiary. 

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For banks, converting a branch into a subsidiary is costlier as the latter would require more capital and it would be subject to tighter regulatory scrutiny by EU banking watchdogs such as the European Central Bank.

The Czech presidency, which leads discussions on behalf of bloc members, and the European Parliament, will have the final say on the commission’s proposals.

The discussions are expected to continue into 2023.