Financiers at the World Economic Forum discuss plans for transferring chunks of their operations out of the City of London, seen above, due to Brexit
“Bankers’ plans have come under the spotlight this week after
Theresa May, prime minister, made speeches in London and Davos declaring that
Britain would leave the EU’s single market following Brexit, eschewing a Norway-style relationship
that would allow privileged access to the 500m-strong market without full EU membership.
Single-market rules allow banks to sell products across the EU via “passporting” rules that allow them to bypass local licenses.
Eurozone authorities are also expected to move to strip London of its ability to serve as the international hub for euro clearing.
The prospect of losing passporting rights meant several banks had already signalled plans to shift jobs out of Britain even before May’s speech …
At Davos, Lloyd Blankfein, chief executive of Goldman Sachs, said the US investment bank was “slowing down”
its strategy of moving more operations to the UK because of concern over Brexit …
Speaking on the sidelines of the World Economic Forum in Davos, American bankers said they had drawn up plans for the most disruptive Brexit outcome —
one that leaves the UK without a trade deal to maintain access to the EU’s single market for the financial services industry …
The first step the US banks have taken is to ensure they have all the necessary
legal structures, capital, licences, systems and regulatory approvals to continue operating in the EU after a hard Brexit,
while maintaining as much flexibility as possible.
One US banker estimated this initial phase would “cost hundreds of millions of dollars but not a lot of people moving” …
The second step, which the US banks plan to take once the new trading arrangements between the UK and EU have been established,
involves deeper changes, possibly including larger-scale job losses or moves …
The US bankers’ cautious comments came after a number of banks issued high-profile warnings this week,
including HSBC’s confirmation of plans to move 1,000 roles in its London-based investment bank to Paris.
UBS said about the same number of its London employees could be affected by Brexit,
while Jamie Dimon, chief executive of JPMorgan Chase, said that more than 4,000 of his bank’s 16,000 UK staff could be hit.
“It looks like there will be more job movement than we hoped for,” Dimon told Bloomberg TV.
“We don’t want to — it is not a threat — it is just a fact that we will have to accommodate the new requirements. ”
James Gorman, chairman and chief executive of Morgan Stanley, told analysts this week that
Brexit was “a moving chessboard. We like the UK; we like the rule of law in the UK, [and] our aspiration is to keep as much of our business there as possible.
But to the extent we have to comply with, obviously, the Brexit rules,
we’ll be putting a headquarters somewhere in continental Europe and that will have some implications going forward.”
Barbara Novick, vice-chairman of BlackRock, who oversees regulatory issues for the world’s biggest fund manager, struck a more sanguine note …
“But we’re obviously still reserving final judgment on how this will play out.””