Banks prep plans to flee amid Brexit
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.