Top US bankers are reported to be preparing contingency plans for Brexit allowing them more time to make a decision on how many jobs to move out of London, as per a report today in the Financial Times. The move is in contrast to recent hearsay in the industry on the mass relocation of city jobs to continental Europe.
Executives from some of the biggest US banks told the Financial Times that a two-stage process could initially avoid moving thousands of jobs out of the UK once the country leaves the EU. The bankers said they had drawn up plans for the most disruptive Brexit outcome, one that leaves the UK without a trade deal to maintain access to the EU’s single market for the financial services industry.
The first step the banks have taken is to ensure they have all the necessary legal structures, capital, licences, systems and regulatory approvals to continue operating in the EU after a hard Brexit, while maintaining as much flexibility as possible.
The second step, which the banks plan to take once the new trading arrangements between the UK and EU have been established, involves deeper changes, possibly including larger-scale job losses or moves.
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The US bankers’ comments came after Britain’s Prime Minister Theresa May declared that Britain would leave the EU single market following Brexit and after several banks issued high-profile warnings this week, including HSBC’s confirmation of plans to move 1,000 roles from its London-based investment bank to Paris.
The possibility of losing passporting rights has led several banks to devise plans for moving jobs out of Britain even before the Prime Minister’s speech.
Tidjane Thiam, Credit Suisse chief executive, also indicated that his bank had been cutting its London workforce since before last year’s Brexit vote from 10,000 staff to 8,000 and had a target to reach 5,000 “irrespective of Brexit”.
Lloyd Blankfein, chief executive of Goldman Sachs, said the bank was “slowing down” its strategy of moving more operations to the UK because of concerns about Brexit.
Nevertheless, moving Europe’s financial centre out of London could prove “very difficult” as Jes Staley, the American chief executive of Barclays has pointed out. James Gorman, chairman and chief executive of Morgan Stanley, also commented this week that Brexit was “a moving chessboard. We like the UK; we like the rule of law in the UK, and our aspiration is to keep as much of our business there as possible”.