* Citi's Irish unit to be directly overseen by ECB
* Decision follows merger of UK-Irish units
* Move to be closely watched by rivals after Brexit vote
(Re-casts, adds detail)
By Francesco Canepa
FRANKFURT, Nov 21 The U.S. bank Citi on
Monday became the first global lender to come under European
Central Bank supervision since Britain's vote to leave the
European Union - an option several UK-based companies are
exploring to keep their access to the single market.
Banks are looking for ways to ensure they can easily sell
their services into the EU, a market of 450 million people,
after Britain leaves. One option is to shift enough assets to a
euro zone country to qualify for ECB supervision.
Citi's Irish unit, Citibank Holdings Ireland, was added to a
list of large banks directly supervised by the ECB on Monday,
after it expanded its balance sheet through last year's merger
with UK-based Citibank International.
The merger predates the June 23 Brexit referendum, but
Citi's move will still be closely watched by competitors
weighing a move to the euro zone.
Goldman Sachs is considering shifting some of its
assets and operations from London to Frankfurt and ECB board
member Sabine Lautenschlaeger said last week several banks are
talking to the central bank about similar moves.
Citi itself has said it might have to re-allocate certain
businesses to the EU, but it would not "hot foot" it out of
The Irish subsidiary houses Citi's retail banking operation
in Europe and has around 46 billion euros ($48.93 billion) in
assets. But it could not accommodate Citi's brokerage or trading
Under U.S. regulation, those must be housed in entities
separate from deposit-taking operations. Consequently, Citi's
brokerage and trading are a separate operation, based in London.
"This is an important milestone for Citi in Europe and we
look forward to a strong engagement with the (ECB)," Citi said
in a statement after passing an ECB health check earlier this
Euro zone banks with assets of less than 30 billion euros
are generally supervised by national authorities, unless they
meet other criteria, such as being one of the three largest
lenders in their country.
The total number of "significant" banks directly supervised
by the ECB fell to 127 from 129 after a merger and two
Italy's Banca Mediolanum, which had also passed
the ECB health check along with Slovenia's Abanka, was not added
to the list because its assets have since fallen, chief risk
officer Massimo Rella told Reuters.
The ECB, which has the power to reject the acquisition of
holdings in any bank in the euro area, has opposed former
Italian Prime Minister Silvio Berlsuconi's owning a significant
stake in Mediolanum through his Fininvest holding company.
($1 = 0.9401 euros)
(Additional reporting by Anjuli Davies and Rachel Armstrong in
London, and Maria Pia Quaglia in Milan, editing by Larry King)