Biggest London City Banks ready to move core European operations to Frankfurt or Dublin?

Event Date: 15/06/2016 Leave supporters hold flags as they stand on Westminster Bridge during an EU referendum campaign stunt in which a flotilla of boats supporting Leave sailed up the River Thames outside the Houses of Parliament in London, Wednesday, June 15, 2016. Reference: EP-037803A Copyright: © European Union 2016 - Source : EPAPimages.

Event Date: 15/06/2016
Leave supporters hold flags as they stand on Westminster Bridge during an EU referendum campaign stunt in which a flotilla of boats supporting Leave sailed up the River Thames outside the Houses of Parliament in London, Wednesday, June 15, 2016.
Reference: EP-037803A
Copyright: © European Union 2016 – Source : EPAPimages.

The United Kingdom last week has voted to leave the European Union and thus opened the most uncertain chapter of its modern history. The business side of the complicated Brexit drama is indeed where the whole world is currently looking at, as the main economic players are still trying to figure out the way they will be influenced by all that turbulence in the markets. Inevitably, the banking sector raises the majority of concerns.

Warnings from the banking system

Prominent US banks such as JPMorgan Chase, Goldman Sachs, Bank of America, Citigroup and Morgan Stanley have been historically setting up their businesses in Britain, as London used to be their main point of access to the European Market for decades, thanks to the EU member-state status the UK enjoyed. Weeks before the vote though, the same big banking groups started to warn they might move at least some of their operation outside of the UK in the event of a Brexit.

Now that the “leave” nightmare has become real the news are certainly not good. Last Sunday it was circulated in the markets that some banks have already begun to take actions to shift their business outside Britain. As reported by the Financial Times on Sunday, lawyers close to the financial world are now warning that after Brexit, many of the big US banks would likely need a new legal home base as they would no longer be able to run their European businesses from the UK. Cities like Dublin, Paris and Frankfurt are reportedly being scanned as new potential home bases.

“Thousands of jobs at risk”

It’s also the “human aspect” to be alarming in this thorny Brexit aftermath. Some of the banking groups mentioned above had reportedly warned before the 23rd of June that thousands of jobs would be moved outside of London if Brexit would happen. HSBC had said before the vote that it could move as many as 1,000 trading jobs to Paris in the event of a “leave”, while Jamie Dimon, Chief Executive of US bank JPMorgan with 16,000 people in Britain, warned that a Brexit could mean a loss of up to 4,000 UK-based jobs.

Mr. Dimon tried to shed light on the future moves of JPMorgan just after the Brexit vote, and sent a memo to his employees. “For the moment, we will continue to serve our clients as usual, and our operating model in the U.K. remains the same”, Mr. Dimon argued. “However, in the months ahead, we may need to make changes to our European legal entity structure and the location of some roles”, he warned.

JPMorgan’s worries

“We recognise the potential for market volatility over the next few weeks and we are ready to help our clients work through it”, Mr. Dimon declared in the note that was also signed by Daniel Pinto, head of the Corporate & Investment Bank at JPM and Mary Erdoes, Head of Asset Management. “As of today, there are no changes to the structure of our clients’ relationships with JPMorgan Chase or their ability to work with our firm, but again this may change in the coming months or years”, the warning ended. Many Brexit backers had seen such declarations as mere scaremongering, although those warnings should not have been undervalued at all.

International Central Banks’ reaction

The weekend also offered another big news, as on Sunday the Bank for International Settlements published an official statement on Brexit after holding its annual meeting in Basel, Switzerland. The BIS, an international financial institution owned by central banks to serve as a sort of central bank forum, said last Saturday evening that central banks are ready to cooperate in order to support financial stability.

“Central bank Governors at today’s GEM discussed the implications of the EU referendum in the United Kingdom”, was the official statement signed by Agustín Carstens, Chairman of the Global Economy Meeting. “Governors endorsed the contingency measures put in place by the Bank of England and emphasised the preparedness of central banks to support the proper functioning of financial markets”, Mr. Carstens underscored, openly showing a keen intention to spread calmness over an already turbulent global market.

Contingency plans already put in place

“With good cooperation at the global level, I am confident that uncertainty can be contained and that adjustments will proceed as smoothly as possible”, BIS General Manager Jaime Caruana echoed Mr. Carstens in the text of a speech seen by Reuters last Sunday. “Extensive contingency plans by the private sector and central banks have been put in place to limit disturbances in financial markets”, Mr. Caruana remarked before pouring also some uncertainty to the matter: “There is likely to be a period of uncertainty and adjustment”, he stressed. “The United Kingdom is closely integrated in the global economy, and it hosts one of the world’s most important financial centres”, Mr. Caruana added.

The heart of City

Only a few days have passed and it is barely impossible to conceive what Brexit will bring to the financial world in the future, and the approach the main players in the banking sector are taking is just a proof of that. Before the vote it seemed like the end of the world would be near while after the vote it looks as if the global economy and also the European society, are in the eye of the storm waiting for something bad to happen.

London is surely too big, and its allure too strong, for any big bank to quit altogether”, the Economist  wrote a few days ago, echoing a much needed reassuring position. However, it is absolutely in the interest of City’s big bankers, and possibly of all the people employed at the heart of the UK’s financial district to carefully weigh all possible chances. The City of London, which employs 360,000 people in financial services, won’t shut down in a night for sure, but it is likely to lose some important business and prestige in the future, lose ground to some smaller financial centres such as Dublin or possibly Frankfurt, places which may sound a bit more appealing destination for traders these days.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

This is how we can make a global green recovery – that also boosts the economy

Global Report on Food Crises reveals scope of food crises as COVID-19 poses new risks to vulnerable countries

The European Green Deal sets out how to make Europe the first climate-neutral continent by 2050, boosting the economy, improving people’s health and quality of life, caring for nature, and leaving no one behind

The dark side of Diwali, festival of lights

Crimea: The last bloodless secession of a Ukraine region?

It takes far too long for a rare disease to be diagnosed. Here’s how that can change

More than one billion people do not have access to electricity. What will it take to get them connected?

GSMA head urges regulators to help Europe regain leadership

COVID-19 pandemic: The war inside our heads

Two shipwrecks add to ‘alarming increase’ in migrant deaths off Libya coast: IOM

CO2 emissions around the world

Guinea-Bissau spotlights threats of organized crime, Sahel terrorism in speech to UN Assembly

Drinking water: new plans to improve tap water quality and cut plastic litter

Climate finance for developing countries reached USD 71 billion in 2017

Coronavirus update: UN scales back major conference

How three US cities are using data to end homelessness

Here’s how we can rethink the way we eat meat

6 ways social innovators are responding to the COVID-19 pandemic

Bigotry makes politicians ‘complicit in the violence that follows’ : UN independent experts

Key economic forum in Russia: New technology a ‘vector of hope’ but also ‘a source of fear’ says Guterres

DR Congo: Ebola response resumes despite ‘risky environment’

‘Our concern now is the southern hemisphere’ – COVID Action Platform convenes leaders on the challenges ahead

COP21 Paris agreement: a non legally-binding climate pact won’t stop effectively global warming while EU’s Cañete throws hardest part to next Commission

Afghanistan: Civilian casualties exceed 10,000 for sixth straight year

Five ways individuals can help save the oceans

UN unveils global influenza strategy to prevent ‘real’ threat of pandemic

UN Envoy urges Burundi leaders to ‘seize opportunities for national unity and peace’

5 lessons for the future success of virtual and augmented reality

‘Concerted effort’ must be made to help 600 million-plus adolescent girls realize full potential: Guterres

How the coronavirus market turmoil compares to 2008 – and what we can do

UN policewoman recognized for ‘speaking up and speaking out’ on behalf of the vulnerable

Antitrust: Commission sends Statement of Objections to O2 CZ, CETIN and T-Mobile CZ for their network sharing agreement

The challenge to be a good healthcare professional

Long-term exposure to air pollution is like smoking a pack of cigarettes a day

Health without borders: How we can Improve International Collaboration in Health Care

GSMA Announces First Keynote Speakers for 2019 “MWC Los Angeles, in Partnership with CTIA”

The Parliament defies a politically biased Banking Union

Austerity lovers to put a break on Renzi’s growth vision for Europe? the Sting reports live from World Economic Forum 2015 in Davos

Amsterdam is getting a 3D-printed bridge

Historic first, as Tolstoy’s War and Peace lands in Geneva, to mark international centenary

Cross-border cooperation: the EU Interreg programme celebrates 30 years of bringing citizens closer together

Renewable energy can get India’s returned rural migrants back to work

Amazon fires: Health Effects, Near and Far

Trump: Hostile to Europe, voids Tillerson’s “ironclad” ally pledge

EU supports recovery and resilience in Nigeria with additional €50 million

Why we need a Paris Agreement for nature

How Sierra Leone is using 3D printing to become a model state

2020 Blue Economy Report: Blue sectors contribute to the recovery and pave way for EU Green Deal

Global Citizen-Volunteer Internships

How young entrepreneurs should be supported: what assistance should governments provide?

Pandemic versus fear

Terrorist content online: companies to be given just one hour to remove it

Why the Greeks forgave Tsipras’ pirouettes around austerity and voted again for SYRIZA

MFF: Commission’s plan “impossible to implement” with Finnish proposal

FROM THE FIELD: Crisis in Kassala FROM THE FIELD: Crisis in Kassala

UN rights chief calls for release of hundreds abducted and abused in South Sudan

5 technologies that will forever change global trade

‘We will not give up on looking for peace for South Sudan’: UN deputy chief

Doctors vs. Industry 4.0: who will win?

Central Mali: Top UN genocide prevention official sounds alarm over recent ethnically-targeted killings

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s