The repercussions of Brexit are still being felt, not just for UK-based lenders but other banks and companies operating in the country. Goldman Sachs is one such bank that has toiled with the notion of shifting some of its assets out of the UK into Frankfurt, one of the main commercial hubs on the European continent, per a Reuters report.
The decision is hardly unusual as many other banks have grappled with similar strategies. Overwhelmingly, UK banks have opted to cut costs aggressively, as well as slash workforces in the country, namely London as revenues and profitability have been lacking in recent quarters, drawing the ire of share holders.
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Goldman Sachs conducts business worldwide, thought the advent of the Brexit has changed the way lenders and companies approach the UK, given the absence of passporting privileges. The move would also help secure access for the US bank into the European Union (EU), ultimately helping shore up its positioning post Brexit.
Ahead of the eventual schism, the bank is also examining the move as a means of qualifying for supervision by the European Central Bank (ECB), thus putting a portion of its operations under the specter of the EU’s principle banking regulator.
The main impetus behind a move would also allow Goldman Sachs to continue offering its services to the overall Eurozone following the Brexit – complicating the matter somewhat are the legal entanglements as the situation is unprecedented and will be navigating unchartered territory once a formal split between the UK and EU is consummated.
The decision is hardly a done deal, though largely mirrors the strategy deployed by other banks operating in the UK. On a broader scale, an exodus out of the UK into a locale such as Frankfurt would also represent a changing of the guard, with the torch passing from London to the German hub, or perhaps another city.