Britain and the EU have very similar financial regulations, and after Brexit the UK granted European companies equivalence, or equal access, in various areas. However, Brussels refused to reciprocate, creating a major challenge for UK banks.
He also insisted that Britain will not seek equal access to European financial markets at any cost.
Instead, Mr Rathi suggested the UK will use post-Brexit freedoms to make its financial services more efficient.
Speaking to the Association of Foreign Banks, he commented: “EU banks are no longer able to offer their clients full access to all global liquidity pools for trading in Interest rate swaps and some credit derivatives, as the UK sites have retained material market share in various products.
“This means higher costs for EU businesses, with a direct impact on the prices they can offer their customers.
“And inevitably, customers in the UK and the rest of the world have no choice but to plan for other contingencies in which EU businesses are unable to meet a wider range of their needs. “
While Britain officially left the EU in January 2020, it remained closely linked to the bloc until December during the Brexit transition period.
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However, Mr Rathi insisted that Britain will not “strive for equivalence at all costs”.
Instead, the focus will be on ‘increased flexibility’ with post-Brexit reforms.
He added: “We will use our autonomy to regulate for the benefit of UK financial markets and consumers.”
As part of Mr Johnson’s Brexit deal, customs controls were introduced on trade between Northern Ireland and the rest of the UK.
This has infuriated trade unionists who fear it will undermine the union.
The EU was determined to avoid any checks on goods traveling between Northern Ireland and the Republic of Ireland.
He argued that this would undermine the Good Friday Agreement which ended decades of conflict.