Royal Bank of Scotland (RBS) has submitted and application for a banking licence in Germany in preparation for Brexit.

According to the Financial Times, after receiving the licence, RBS will replace its existing Frankfurt branch with a newly licensed business that will give it access to European markets.

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The new unit will operate as a regional “payments hub” for the bank and continue to use infrastructure maintained by the Bundesbank.

Additionally, it will process and settle euro-denominated payments, manage euro liquidity, and provide loans and accept deposits from German clients, the report said.

The British lender has started the process of hiring nearly a dozen employees, including treasury and local regulation specialists, to deal with the expanded business requirements at Frankfurt base.

The acquisition of ABN Amro before the financial crisis already gave RBS a banking licence in continental Europe; however the additional Frankfurt licence will sit inside its legally-separated ring-fenced bank, the FT report added.

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Due to the closeness to regulators such as the European Central Bank, Bundesbank and BaFin, Frankfurt has emerged as one of the most popular destinations of the financial organisations looking to relocate or expand operations following Brexit.

Meanwhile, the Lloyds Banking Group plans to create three independently licensed European subsidiaries in Berlin, Frankfurt and Luxembourg due to the ring-fencing legislation and safeguard different parts of its business after Brexit.