(AP Photo/Matt Dunham)
LONDON - Fewer than ten of the approximately 40 banks that are conducting EU business out of London have so far applied for a licence to continue banking in the bloc after Britain leaves, regulatory sources said.

The slow pace of applications is raising concern at the European Central Bank that some lenders are not doing enough to prepare for Brexit, or may even avoid its watch through a gap in the rules.

The past two months have seen a pick-up in the number of banks saying they plan to set up new EU subsidiaries after Brexit, with most major US, British and Japanese banks saying that they will establish units in Frankfurt or Dublin.

But supervisory sources say they have still seen few formal applications for licences.

“We’re having lots of meetings, but not enough concrete action,” one supervisor said.

While Britain does not leave the EU until March 2019, bank executives have said time is already running out: it could take 18 months or more to set up a new subsidiary, given the need to relocate staff, get the requisite technology and change contractual arrangements with EU clients.

The location of investment banks’ European headquarters is a major issue during Britain’s negotiations to leave the EU.