Lloyds to set up subsidiary in Berlin to retain access to Europe after Brexit

Lloyds is considering setting up a subsidiary in Berlin to retain access to the single market after the UK's exit from the European Union, according to reports.

The lender, which is nearly 6% state-owned, already has a branch in the German capital with a full management team in place and would only need to change the status of those roles to meet legal requirements for a subsidiary, a source was quoted as saying by Reuters.

It is unclear if Lloyds intends to move more staff from Britain to Germany, where it operates through the Bank of Scotland brand.

Lloyds is the only major British bank without a subsidiary in another EU country and has been drawing up plans to retain access to the single market after Brexit.

It had previously explored setting up a subsidiary in Amsterdam and Frankfurt, where the European Central Bank is located.

Lloyds employs around 300 people in Berlin via its Bank of Scotland business, including finance, risk and human resources staff.

It handles around £9bn ($11bn) of consumer deposits at the branch, a source told Bloomberg.

Last month, both HSBC and Swiss bank UBS announced that they were preparing to move 1,000 jobs each out of the UK as a result of Brexit.

"Activities specifically covered by EU legislation will move, and looking at our own numbers, that's about 20 percent of revenue," HSBC chief executive Stuart Gulliver told Bloomberg in January.

"Some of our fellow bankers have to make decisions quickly" if they did not have a subsidiary in continental Europe, he added.

Prime Minister Theresa May said in a speech on 17 January that the UK will exit the European single market.

"I want to be clear: what I am proposing cannot mean membership of the single market," she said.

"It would, to all intents and purposes, mean not leaving the EU at all."

Formal Brexit negotiations are set to get underway after May's government triggers Article 50 of the Lisbon Treaty by the end of March.