Leading banks are in advanced stages of planning to shift some of their operations from London to Paris amid fears over Brexit, France's top stock market regulator has said.
Benoit de Juvigny, secretary general of Autorite des Marches Financiers (AMF), told the BBC that "large international banks" based in London have conducted due diligence to move operations to the French capital.
He said the French regulatory department will likely be expanded to handle the potential influx of companies.
A so-called "hard Brexit" would likely mean the loss of passporting rights for British financial institutions, which allow banks based in the UK to offer services to companies and governments across the European Union without restrictions.
There are fears that this could lead to an exodus of banks from London to other European cities.
The BBC says at least eight financial centres across Europe are actively wooing companies based in London – Paris, Frankfurt, Dublin, Luxembourg, Amsterdam, Madrid, Bratislava and Valletta.
De Juvigny warned of the dangers of national regulators competing with each other to attract business, saying this could lead to leniency and lax regulation that could trigger another financial crisis.
"The danger is the race that we could have for a more lenient regulation with a more lenient regulator," he told BBC's Newsnight.
Citigroup is reported to be among the international institutions considering moving some of its operations from London to Frankfurt.
Citing sources, the Independent said the US company was already holding talks with the German financial regulator BaFin about getting the necessary approvals.
"We are evaluating our options as negotiations between the EU and UK continue," Edwina Frawley-Gangahar, a Citigroup spokeswoman, was quoted as saying.
"Considerable uncertainty remains over the nature of the UK's eventual exit from the EU, and therefore we have not taken any decisions at this point. London is, and will remain, our EMEA headquarters and a global hub for many of our businesses."