The signing of Article 50 confirmed what most banks already knew: London’s bridge to the EU market is falling down. But where should they go?
Dublin, Frankfurt or Paris: which city can replace ‘The City’ after Brexit? One, none or all?
We’re beginning to find out, now that major financial institutions are shifting thousands of jobs away from London after Brexit was signed and sealed, though not yet delivered.
Requiring a financial passport to operate within the EU (said passport can come from any member state), those with UK papers have had the rug pulled from under them.
Bank of England governor Mark Carney has requested all banks operating in the UK to reveal their plans to ensure continued service to customers there.
Reuters predicts as many as 9,000 jobs exiting the English capital. The only option appears to be flight.
Ireland’s capital is an obvious option for London’s major banks, with the short commute, the English-speaking workforce, and the encouraging relationship between state and corporation.
This has proven true in the weeks and months following the signing of Article 50 by UK prime minister Theresa May, thus ensuring the UK leaves the EU.
Barclays, for example, is utilising its existing 40-year presence in Ireland, where it already has a licence.
The bank, in reference to Dublin, said: “Barclays intends to utilise an existing, licensed, EU-based bank subsidiary to continue passported activity.”
It is unclear what this means on the jobs front, though it won’t be a trickle, considering who else has joined the Dublin ranks.
With Ireland already home to a significant part of Bank of America’s operations, for example (its corporate and investment banking division called Bank of America Merrill Lynch is situated there), Dublin always seemed a possibility.
This month, Alexander Wilmot-Sitwell, president for the group’s EMEA operations, told The Irish Times: “Until the final outcome of the political negotiations has been reached, none of us will know how we will operate in the future.
“We do know that we’re going to have to have entities in place within the single [European] market. But a hub starts attracting other things into it … creating a magnetic influence on the business.”
Elsewhere, Citigroup is understood to be bulking up its Dublin workforce, too, with JP Morgan doing something similar.
Citigroup was one bank originally rumoured to be eyeing up Dublin as a new base, where it employs around 2,000 people, but this month it was confirmed that Frankfurt would host its latest hub.
That said, it revealed that 150 positions would be shared across the EU as part of the move, with Amsterdam, Luxembourg, Dublin, Madrid and Paris all to benefit.
With a hub in Frankfurt, Wilmot-Sitwell’s above comment could prove a key benefit for the German city.
Elsewhere, Morgan Stanley revealed similar plans for a Frankfurt base. 200 people will be heading to the city, with Dublin expected to gain the company’s asset management business.
In May, Standard Chartered was one of the earlier movers to Frankfurt, with Jose Vinals, chair of the FTSE 100 banking giant, saying the city was a “very natural” choice.
“First, because we already have a branch there, and because it is in Frankfurt that we do our euro-clearing activities,” he said at the time.
Goldman Sachs and Japanese financial group Mizuho are also said to be swaying towards Frankfurt, with the former already leasing additional office space. Meanwhile, Nomura and Daiwa, two more Japanese banks, have made their Frankfurt decisions official.
HSBC’s shift to Paris is amid a bit of confusion, with the UK’s approach to Brexit growing more and more unclear. The debate between a ‘hard’ and ‘soft’ Brexit – essentially, a total secession or a part secession – comes into effect.
Initially, Europe’s biggest bank suggested moving as many as 1,000 investment bankers to Paris when talks of a particularly harsh Brexit was most likely.
Now, though, that stance has softened.
“I don’t think that we’ll go for hard Brexit anymore from all that we hear,” said Samir Assaf, HSBC’s investment bank chief earlier this month, though some form of Parisian shift will happen.
“We have our base in France, we have our building in France, we have our systems in France, we have our licences in France, and the addition that we have to do for Brexit effort is marginal,” said Assaf, adding that it was an opportunity to gain an influx of clients.
Paris has been on an aggressive marketing campaign to win as many ‘Brexit banks’ as possible, with the likes of tax changes and plans to increase the number of international schools in the city just two of its tactics.