Ever since the Brexit referendum last year, analysts and leading individuals in the banking sector have portended a mass exodus of personnel out of the UK. While initial estimates cited numbers in the tens of thousands, it appears this figure is now substantially less, with banks now poised to retain large portions of their UK workforce.
Indeed, a new FT report shows that less than 5,000 city banking jobs may move at all, a far cry from the grave predictions launched earlier this summer. The emergence of more concrete figures is noteworthy given the large number of banks opting to install EU bases within the bloc itself.
Reading the tea leaves
This past July saw most banks disclose their plans to relocate their EU headquarters out of London. The decisions were ultimately prompted by the Bank of England, which necessitated more clarity from banks opting for any such move. What happened next was a whirlwind of announcements from lenders such as Deutsche Bank, Barclays, and others regarding cities such as Frankfurt, Dublin, and others.
The genesis of the moves stemmed from the UK’s terse rhetoric surrounding passporting, long seen as a draw for banks operating in the country. With these key provisions seemingly hanging in the balance, many banks chose to draw a line in the sand after months of negotiations and Theresa May’s insistence against the practice post-Brexit.
Consequently, analysts were predicting the movement of thousands of banking jobs out of London into a variety of cities in Europe. While Frankfurt and Dublin emerged as the top two destinations, other cities such as Amsterdam, Paris, and others also won key bids in enticing banks to choose their locale.
Job market in flux
The banking sector had already been one of the hardest hit in the UK over the past few years. Nowhere has this been more prevalent than in London itself, with thousands of backoffice and IT jobs being axed by lenders. Deutsche Bank, Standard Chartered, and others kicked off sweeping cost-cutting measures back in 2015, with these roles and others being eliminated en masse.
Following this purge, many predicted similar doom-and-gloom estimates in the sector, which seemed plausible at the time given the closure or absorption of many trading desks. FX and fixed income desks over the past two years have been scaled back at many leading banks, or relocated to Asia or elsewhere.
However, original projections calling for over 10,000 jobs leaving on day one of Brexit now appear to be more rumor than anything else. Deutsche Bank for example suggested previously that upwards of 4,000 of its staff would relocate out of London – today that number seems closer to 350.
Of note, the relocation of approximately 350 people would correlate to roughly 5 percent of the banks staff in London – this is on par with other City banks. As such, it’s likely that the ratio could serve as a paradigm for others. Many banks are simply moving portions of staff in a bid to set up a new EU base, instead of not entire offices.
The reduced numbers of prospective staff being relocated are also more in line with constraints in each respective destination city. For example Frankfurt had long grappled with a dearth of office space for banks, a fact made clear in the decision making of many. Dublin also showed a lack of raw personnel to fill the void, given the small size of the capital.
In each instance, it seemed unlikely that too many jobs could relocate given the logistical hurdles. However, closing in on a leaner number of less than 5,000 would also help streamline the process and prevent any broader hiccups closer to 2019.