Daily Management Review

Brexit Hasn't Even Kicked In Yet And Bank Jobs Are Bleeding Out Of London


Brexit Hasn't Even Kicked In Yet And Bank Jobs Are Bleeding Out Of London
Once the U.K. leaves the European Union, the City of London is unlikely to change substantially despite fears of irrevocable damage.
Given that it's likely to lose its EU passporting rights – meaning that it will need extra licenses to serve EU-based customers, the financial services industry has been quietly preparing for Brexit.
While it is unclear how many employees will have to be moved from London to other European cities the negotiations between London and Brussels are still ongoing. At the moment, compared to the overall size of the industry, the disruption appears to be minimal.
With Frankfurt and Dublin the top destinations for institutions that wish to continue working with clients across the EU, there are clear winners from the exit of some jobs from London.
The British bank Barclays has said that to continue its European trade it will expand its Irish subsidiary. Since the bank as it is still in negotiations with regulators and waiting for more details from Brexit talks, it hasn't revealed figures of how many new jobs it will need in Dublin.
The preferred location to place its European legal entities for Bank of America is also Dublin. "Dublin is the home to more of our employees than any other European city outside of the U.K. We already have a fully licensed and operation Irish-domiciled bank," the bank said in a statement in July.
In different EU locations, Citigroup might create 150 new jobs. its existing subsidiary in Frankfurt would be converted into an investment firm by the bank. And in other cities, such as Amsterdam, Dublin and Paris other capabilities such as private banking will also be enhanced.
The Swiss bank Credit Suisse is "currently exploring solutions to various outcomes, including a hard Brexit," a spokeswoman said. The bank’s UK-based workforce has been reduced over the past few years as a result of restructuring plans even though it hasn't presented any Brexit strategy as of yet.
The German lender Deutsche Bank is set to beef up its Frankfurt basis but hasn't specified its Brexit plans. It could move up to 4,000 jobs to Germany - the highest potential bank move, the bank said in April this year.
The investment bank `Goldman Sachs’ management team has given a few indications of what might happen even though it hasn't presented its plans for the post-Brexit world. The bank has begun moving operation from London to Frankfurt and other European cities, Richard Gnodde, head of Goldman Sachs Europe said in late July. "Client-facing staff will move closer to their clients, be it Milan or Madrid or any other European capital," he said. The number of employees based in Frankfurt could double from 200 bankers at present, according to Gnodde.
HSBC's CEO Stuart Gulliver said during the bank's full year results: "We employ 43,000 people in the UK. When they leave the single market, which obviously the Prime Minister has indicated that we will, we will employ 42,000 people in the UK and a thousand jobs will be unlawful to carry out from the U.K. once we've left the single market." Since the lender owns a bank in France that has all the licences, the lender chose Paris.
JP Morgan will use Dublin, Frankfurt and Luxembourg as "legal anchors"  and is expected to move "hundreds" of employees.
Royal Bank of Scotland (RBS) has said that placing its EU-focused business in Amsterdam is being looked at by it.  "Obviously we've got a bank there with the appropriate licenses, we've had a long history in Amsterdam (and) for us at least it is a very logical choice," Ewen Stevenson, RBS chief financial officer said during the bank's latest results earlier this month.
"We are in the process of submitting an application to an EU subsidiary to be based in Frankfurt, This is not our headquarters, which will very much remain in London," said Standard Chartered bank about its post Brexit plans.