Banks prep plans to flee amid Brexit

China Daily (Canada) - - XI’S VISIT - By BLOOMBERG

Fi­nance ex­ec­u­tives said they are pre­par­ing for the worst on Brexit af­ter Prime Min­is­ter Theresa May said on Tues­day that the United King­dom will quit the Euro­pean Union’s sin­gle mar­ket.

“If you don’t know where you are go­ing, you have to plan for the worst and ex­e­cute faster,” HSBC Hold­ings Chair­man Dou­glas Flint said in a speech at the­World Eco­nomic Fo­rum in Davos, Switzer­land.

“This isn’t rocket sci­ence. Busi­nesses want to­know, ‘what is the am­bi­tion? And how does one deal with the tran­si­tion? Is it the dreaded cliff edge or is there some kind of stand­still’.”

Banks, brac­ing for the loss of their right to sell ser­vices freely around the EU from Lon­don, are set to start the process of mov­ing oper­a­tions into the eu­ro­zone within weeks of the gov­ern­ment trig­ger­ing Brexit talks, which is sched­uled to hap­pen by the end ofMarch. The prime min­is­ter said on Tues­day that she ex­pects Bri­tain to leave the sin­gle mar­ket and over­haul its links to the cus­toms union, ac­cord­ing to a per­son fa­mil­iar with the mat­ter.

UBS Group AG Chair­man Ax­elWe­ber, said the “work­ing as­sump­tion” is that banks will lose ac­cess. “It’s im­por­tant to cre­ate op­tion­al­ity now, but let’s see what the fi­nal agree­ment is,” he said in Davos.

Martin Gil­bert, chief ex­ec­u­tive of­fi­cer of Aberdeen As­set Man­age­ment, said it was time for banks to de­cide whether they were go­ing to move to Dublin, Paris or Frank­furt.

“You have to work out where you are go­ing and you have to plan for the worst and hope for the best,” Gil­bert said.

Global bank chiefs have warnedMay that they will soon start shift­ing oper­a­tions and jobs from the UK to else­where in­Europe­un­lessshecan­pro­tect their easy ac­cess to its mar­ket.

To avoid the need for pre­emp­tive staff moves out­side Bri­tain, bank­ing lead­ers have asked for an in­terim agree­ment soon af­ter May trig­gers the Ar­ti­cle 50 exit clause, kick­ing off a two-year tran­si­tion pe­riod. None­have so far­moved peo­ple abroad or for­mally ap­plied for bank­ing li­censes.

It’s “still pre­ma­ture” tomake de­ci­sions on Brexit, said Brian Moyni­han, pres­i­dent of Bank of Amer­ica, in Davos. “Lon­don will be an im­por­tant part of our com­pany no mat­ter what. We have to wait for the rules to get de­vel­oped.”

Stan­dard Char­tered has ap­proached Ir­ish and Ger­man of­fi­cials about mak­ing Dublin orFrank­furt its le­gal base in­side the EU once Bri­tain be­gins the for­mal process of with­draw­ing, peo­ple fa­mil­iar with the dis­cus­sions said in De­cem­ber.

Cit­i­group is in dis­cus­sions with Ger­man reg­u­la­tor BaFin about mov­ing some of its eq­uity and in­ter­est-rate de­riv­a­tives traders to Frank­furt from Lon­don, Bloomberg re­ported in De­cem­ber.

In Septem­ber, UBS CEO Ser­gio Er­motti said hemay have to move as many as 1,500 jobs from theUKto else­where in the re­gion af­ter Brexit. Be­fore the June23ref­er­en­dum, HSBC­said a vote to quit theEU­would­likely see the­bankre­lo­cate as­many 1,000 peo­ple to Paris. JPMorgan said at the time that 4,000 jobs could be at risk.

Ire­land’s min­is­ter in charge of fi­nan­cialser­vices­said­he­ex­pects a wave of UK-based com­pa­nies to de­cide to re­lo­cate to the coun­try by the mid­dle of this year.

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