The uncertainty over Brexit and how it is going to be implemented has affected many top banks and financial institutions. The UK has been the nerve center of the European capital markets and the decision of the UK to leave the EU has opened up the opportunity to decentralise operations. Many major financial firms are trying to shift their operations to other cities including Frankfurt, Madrid, Dublin, Paris, and Amsterdam.
The investment banks CitiGroup and Deutsche Bank are the latest to join the growing list of financial institutions who are moving their offices out of the UK on account of restricted access to the EU, which is likely to be one of the outcomes of a ‘hard’ Brexit.
Citi told its staff in an internal communication that it will create 150 new jobs across Frankfurt, Amsterdam, Dublin, Luxembourg, Madrid and Paris to deal with the transition. The majority of the jobs will be based in Frankfurt, the company’s primary choice for headquartering its EU broker-dealer.
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The new facility which will house the bank’s trading business will be created by converting a licence it holds in Germany.
Mr Jin Cowles, Head of Europe, Middle East and Africa operations, commented on the development: “We also expect to further enhance our capabilities in Private Banking, Treasury & Trade Solutions, Corporate & Investment Banking and Capital Markets by increasing over time our footprint in other key EU cities including Amsterdam, Dublin, Luxembourg, Madrid and Paris. It is not yet possible to assess the outcome or timing of the Brexit negotiations, but in certain circumstances we may need to create approximately 150 new roles located in the EU. In all cases, London will remain both our EMEA headquarters and an important global hub for Citi.”
Deutsche Bank Follows Suit
The CEO of Deutsche, John Cryan, himself a Briton, also said that the bank is likely to shift a large part of its operations from London to the German city of Frankfurt where it already has a large base, in a taped message to employees.
Trading and investment banking assets are likely to be moved from London to Frankfurt which will necessitate the shifting of the jobs of several hundred traders and thousands of client accounts. Frankfurt has emerged as the chief beneficiary of this migration of financial institutions out of the UK with Nomura Holdings Inc, Citigroup, Morgan Stanley and others choosing the city as the alternate hub for their business. The city has welcomed them with open arms.
The company is also likely to replicate in Frankfurt the booking that currently happens in London, so that it can make the transition in a smooth manner. The various companies are not waiting to see how the Brexit negotiations are resolved but have chosen to assume the worst and go ahead with their moves.