Financial firms target UK exit
• Goldman Sachs and Morgan Stanley prepare to move staff
Goldman Sachs Group and Morgan Stanley executives say they are preparing to shift staff and operations from London to elsewhere in the EU as Prime Minister Theresa May sets up the UK’s exit from the bloc.
A day after May’s office announced she will open two years of divorce talks with the EU on March 29, Richard Gnodde, co-head of investment banking at Goldman Sachs, told CNBC on Tuesday that his bank would initially relocate hundreds of London-based employees to expand other offices after the split.
“We’ll hire people inside of Europe itself, and there will be some movement,’’ he said.
Brexit may disrupt the financial industry more than others if the UK’s separation from the EU costs banks their ability to easily serve consumers and companies across the region.
US banks currently work throughout the bloc from bases in London, but the “passporting rights” enabling them to do so are unlikely to be extended once the UK has pulled out.
Goldman Sachs is considering Frankfurt, Germany, as a hub inside the EU and could move as many as 1,000 employees including traders and senior managers, a person familiar with the matter has said.
GRAND STATEMENTS
Morgan Stanley president Colm Kelleher told a conference in London that he would “certainly” have to move some people, although the bank will avoid making “grand statements”.
“It’s not going to be the end of London,’’ he said. “But, clearly, we will have to adjust.”
Morgan Stanley is scouting for office space in Frankfurt and Dublin, Ireland, for an enlarged EU hub, people with knowledge of the matter said in February. The bank may move about 300 workers to one of the cities.
The tide of jobs moving out of London may even affect the lender that is still majorityowned by UK taxpayers. Royal Bank of Scotland chairman Howard Davies said the bank planned to strengthen existing offices in Frankfurt, Paris and elsewhere in the region. The number of jobs leaving London after article 50 was triggered would initially be relatively modest, he said on Wednesday.
“People will move the clientfacing people in market. I think that will happen, I think that’s started to happen already,” Davies said. “Any major moves of trading operations will wait for a while to see what kind of deal eventually is done.”
CEO Ross McEwan said it was not a considerable move for Royal Bank of Scotland to establish a new hub in the EU.
“Like all other banks, we’re probably planning for the worst, hoping for the best. But there’s no point in hoping.”
Meanwhile, the European Central Bank’s top supervisor warned on Wednesday that banks moving from London to EU financial centres as Britain quits the bloc will not be given an easy ride by regulators.
“We obviously don’t care whether UK banks move to Frankfurt, Dublin, Paris or some other location in the euro area. What we care about are safe and sound banks,” ECB board member Sabine Lautenschlaeger said. “We will, therefore, resist any supervisory or regulatory race to the bottom.”
Big banks have been sounding out regulators in different EU nations as they look for a new base to do business in Europe once Britain leaves.
If it goes ahead with a “hard Brexit”, the UK will leave the European single market, meaning banks based there will lose the “passports” that allow them to do business from London with clients across the remaining EU members.
To continue operating in Europe, many financial companies will have to set up new business units in EU countries — although many global banks already have some operations in cities such as Paris and Frankfurt.