Luxembourg and Ireland have officially entered the race to house the EU's banking authority, while Frankfurt is believed to be the frontrunner to host the European Banking Authority (EBA).

Monday July 31 marks the deadline for the submission of applications by countries hoping to host the EBA once the UK, which now hosts the authority, leaves the European Union.

The post-Brexit future of the EBA and the European Medicines Agency (EMA), given their key regulatory roles, is important in itself.

But housing the EU's banking authority is also a matter of money and prestige, with many of the remaining 27 EU member states keen to host agencies set to leave London.

The EU is expected to make a final decision by November.

Luxembourg makes a bid

Ambassador Georges Friden, permanent representative to the EU, announced on Monday that Luxembourg submitted a formal bid to host the EBA.

In a statement, the Ministry of Finance portrayed Luxembourg as a truly European and international financial centre and "best equipped to guarantee a successful relocation" of the banking authority.

Minister of Finance Pierre Gramegna said Luxembourg was willing to offer the EBA "state-of-the art office space, free of rent", with the building being "ideally located a few minutes' drive from the city centre, European institutions and the international airport".

Luxembourg's authorities are also offering a dedicated team that can stay in close contact with EBA staff during the construction phase "to make sure all of their specific needs are met".

Luxembourg's legal right

In March, Luxembourg claimed the legal right to host the London-based EBA after Brexit.

Citing an EU law dating back to 1965, Luxembourg Prime Minister Xavier Bettel made his case in a letter to EU Council President Donald Tusk and European Commission head Jean-Claude Juncker.

"Luxembourg's claim to host the EBA is nothing more than the implementation of this agreement that is still valid today," a government spokeswoman said.

"We want the 1965 decision to be respected and therefore claim the EBA's new host should be Luxembourg."

There have been two exceptions, however, to the 1965 decision, with the European Central Bank (ECB) going to Frankfurt and the EBA to London.

"Those exceptions had been made in agreement with Luxembourg and were regarded as exceptional derogations," a spokeswoman of Luxembourg's Permanent Representation in Brussels said.

"This time, we want the 1965 decision to be respected and therefore claim that the EBA's new host should be Luxembourg."

Ireland files application

On Monday, 31 July, Ireland also expressed its intention to file an application before the end of the day, weeks after lauding Dublin as the "best option for the important work of EBA and the least disruptive location for EBA staff".

The press office at the Irish Department of Finance told Luxemburger Wort that Dublin officially joined the list of cities wanting to be considered for the relocation of EBA.

In June, Irish authorities published a brochure promoting Dublin as the location of the EBA.

At the time, former Minister for Finance Michael Noonan argued that Ireland had "a significant International Financial Services Centre which has been built up over the past 30 years".

Other potential contenders

According to media reports, several European cities have expressed an interest in becoming home to EU's authorities for the banking sector, including Amsterdam, Copenhagen, the northern French city of Lille, Stockholm, Paris and Barcelona.

According to Agence France Presse, Vienna, Dublin and Warsaw have also put themselves forward as candidates for both EBA and the EMA.

The EMA, which has been based in London since 1995, employs nearly 900 people and accounted for nearly 30,000 nights of hotel stays by visitors in 2015, according to EU figures.

About EBA

The EBA is an independent EU authority designed to ensure effective and consistent prudential regulation and supervision of the European banking sector.

The EBA's main role is to contribute to the creation of the European Single Rulebook in banking, whose objective is to provide a single set of harmonised prudential rules for financial institutions throughout the EU.

The authority also plays an important role in promoting convergence of supervisory practices and is mandated to assess risks and vulnerabilities in the EU banking sector.

The EBA was established on 1 January 2011 as part of the European System of Financial Supervision and took over all existing responsibilities and tasks of the Committee of European Banking Supervisors.

As of 2014, EBA employs some 159 people.