London has been the unquestioned financial capital in Europe for decades, though the immediate future could see the UK capital knocked off its pedestal as global lenders look to life after Brexit. This sentiment is shared by many in the city and banking space, including Goldman Sachs’ CEO Lloyd Blankfein, who warned that the city’s progress could stall because of the upheaval Brexit will bring to the industry, according to a BBC report.
Since the triggering of Article 50 earlier this year, banks have already seen the writing on the wall, opting to look at new destinations within the European Union. The British PM’s terse language towards the elimination of passporting rights for banks also helped drive a nail in the coffin, virtually ensuring an exodus of bankers and talent out of London – something many had been planning for.
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Given London’s ascension as the European banking capital over the past decades, it is unlikely this process could immediately reverse – what could transpire is a stagnation or stalling of this trend however, given the felt impact of thousands of jobs lost or relocated. To date, the city has been ground zero for job losses and other cuts, with virtually every major lender trimming their London staff as labor costs, industry headwinds, and profitability have collectively eroded profits.
Indeed, Mr. Blankfein reiterated this sentiment, suggesting: “I don’t think it will totally reverse. It will stall, it might backtrack a bit, it just depends on a lot of things about which we are uncertain and I know there isn’t certainty at the moment.”
Lenders have been looking at Dublin, Frankfurt, and Amsterdam as the top three options for moving their operations from the UK. Each present their own unique advantages and disadvantages.
On Goldman’s part, the group had already warned that large job relocation efforts would be underway several months ago. However, Mr. Blankfein stated that the bank would try to avoid cutting as many jobs as it can – to date, the group has not been as active in the firings and cuts as other lenders such as Deutsche Bank and Standard Chartered.