LONDON - Financial firms must "speed up" contingency plans in the event of Britain exiting the European Union without a deal, the bloc's banking watchdog warned on Monday.
The European Banking Authority (EBA) said it was "imperative" that the bloc's financial institutions "identify potential exposures and risk channels that may be affected, and the possible implications of the potential departure of the UK without a ratified withdrawal agreement in place".
It comes as IMF head Christine Lagarde spoke of the "critical" importance of continental Europe having necessary regulations in place "for the influx of financial firms" from the UK.
There is growing concern that Britain could next year leave the EU without a deal, as tough Brexit negotiations stall in regards to the border between Northern Ireland in the UK and Ireland.
EBA chairperson Andrea Enria said that "firms cannot take for granted that they continue to operate as at present nor can they rely on as yet unrealised political agreements or public policy interventions".
He added: "Risks, capacity and legal implications must be examined and addressed."
Miles Celic, chief executive of financial services lobby group TheCityUK, dismissed suggestions of inadequate preparations.
“Financial services firms in the UK have had contingency plans in place for months," he said in a statement.
"Our industry has had a constructive, ongoing dialogue with regulators and government. We have worked together to minimise the risk of disruption to clients and the wider economy."
Celic, however, called upon European authorities "to engage urgently and seriously" in making sure cross-border financial services contracts, including for individuals' pension and insurance products, are maintained following Brexit.
"The lack of progress by EU regulators on this vital issue is the most pressing item on the agenda,” he insisted.
Based in London, the EBA will move to Paris following Britain's withdrawal from the EU scheduled for March next year, while banks and other firms are planning also to move some or all of their operations away from the UK with or without a Brexit deal.
During a visit to Dublin on Monday, Lagarde said that "in the near-term, it is critical to ensure that regulatory and supervisory capacities are prepared for the influx of financial firms that will eventually move to continental Europe -- and Ireland -- from where they are at the moment".
'Need to engage now'
Elsewhere Monday, a survey showed that almost 50 percent of businesses in EU countries, excluding Britain, had cut investment because of Brexit.
A poll of 800 business leaders across six major European markets, carried out by global law firm Baker McKenzie, found "nearly half of respondents saying that their company has reduced investment in the UK and they had already seen disruption to their supply chains resulting from the Brexit vote".
"While Brexit may be prompted by the UK, it will impact businesses in both the UK and the EU dramatically," said Ross Denton, a partner at the law firm specialising in trade.
"To ensure Brexit is the success it potentially can be EU businesses need to engage now if they feel unheard or under-prepared, either through their national or European trade associations, or directly with the EU and national governments."
Increasing the pressure on British Prime Minister Theresa May, planemaker Airbus last week warned that it could exit the UK should the country fail to strike a deal with Brussels.
The European group, which directly employs nearly 15,000 people in Britain, warned that crashing out of the bloc would be "catastrophic" and force it to consider its investments.