Lloyds Banking Group intends to operate three different subsidiaries in continental Europe after Brexit. It is just one example of how Britain's exit from the EU is forcing banks to spread operations away from London.

Lloyds was expected to run its EU business from a new subsidiary in Berlin, where it already has about 300 employees. Britain's largest mortgage lender is now planning two more subsidiaries for customers in the EU, Reuters reported on Tuesday.

Read more: EU Customs Union, Single Market, Brexit — What you need to know

The Frankfurt subsidiary would handle euro bond trading, while the location of the third office — to handle Lloyds' "closed-book" insurance business — is still unkown.

Each subsidiary would be separately capitalized and licensed by regulators.

Too big to fail

Lloyds' decision is in part driven by new UK "ringfencing" regulations requiring banks to divide up their balance sheets between retail and investment banking operations before January 2019.

The new regulations are intended to protect depositors and taxpayers from a "too big to fail" banking crisis situation.

In order to comply with the regulations after Brexit in March 2019, Lloyds requires a second subsidiary to back up its non-ringfenced euro bond trading business, Reuters reported.

The black horse logo distinguishes Lloyds

Growing trend

Lloyds' plans reflect a broader trend of banks setting up shop across continental Europe.

Hubertus Vaeth, managing director of Frankfurt Main Finance, told Bloomberg: “A clear warning signal is that most banks are spreading jobs widely across Europe to keep all relocation options open."

Goldman Sachs has taken office space in Frankfurt, which hosts the European Central Bank, but also has plans for operations in other European cities.

When Paris became the new center for the European Banking Authority last November, the decision emphasized the French capital's claim to become a major financial hub. Citibank has already taken office space there.

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