A problem not just for London’s finance sector
The UK’s many regions find Brexit enforced concerns swirling around them as well with two-thirds of finance workers located outside and 90 of the top 100 constituencies with the highest share of banking outside the capital
avid Whitehouse has two business cards: one for his office in London’s Shard skyscraper, the other for a rundown building in Manchester. Most days, the Duff & Phelps Corp. restructuring specialist works up north in Manchester, a city better known as the 19th-century heart of Britain’s industrial revolution than as a financial centre. A couple of days each week, he catches the 6:59am train to the nation’s capital, just two hours away.
“We’re literally a suburb of London,” Whitehouse said. With Brexit looming, what may be bad for London could also hurt the UK’s regions. “We want Manchester to remain a key financial-services hub. We don’t want to yield ground to Dublin, and that is a very real risk.”
Ask Britons where the majority of the country’s 2.2 million finance workers are located and most would probably say the City of London. But two-thirds are located outside the UK banking hub in cities from Edinburgh to Birmingham and Manchester, according to a report by TheCityUK. Financial and related professional services contributed £176 billion (Dh804 billion; $219 billion) to the UK economy in 2015, with more than half generated outside the capital.
The lobby group is laying out the national scope of the finance industry just as Prime Minister Theresa May prepares to extract Britain from the European Union, a decision backed by every UK region barring London, Scotland and Northern Ireland. Although the focus has been on whether London’s finance jobs might move to Frankfurt, Dublin or Amsterdam, there’s growing concern jobs outside the capital might also be at risk.
The industry’s reach could put May under pressure to defend finance in the Brexit talks despite refusals from within her government to grant it special status. A report by the British Bankers’ Association estimated that 90 of the top 100 parliamentary constituencies with the highest share of banking lay outside the capital.
“You can’t just think it’s a London issue,” said Steve Cooper, CEO of personal banking at Barclays Plc. “There are issues for both London and the wider UK around Brexit, so managing the transition to whatever the outcome will be needs to be very well considered and very well thought through.”
Cooper makes regular trips from Barclays’s Canary Wharf headquarters to its global technology hub in the leafy English county of Cheshire, where 3,200 employees work in a former manor house named Radbroke Hall. The bank invested 15 million pounds at the site, tests ATMs in an outbuilding and runs a so-called global command center filled with monitors that resembles the bridge of “Star Trek’s” U.S.S. Enterprise.
Global firms have spread staff outside London to cut costs, and the scale of their operations can be vast. JPMorgan Chase & Co. employs 4,000 in Bournemouth on England’s south coast, while Bank of New York Mellon Corp. has 1,300 staff in central Manchester, led by Matt Wells, the head of global cash operations. Deutsche Bank AG has hundreds of investment-banking jobs in Birmingham, while HSBC Holdings Plc is moving about 1,000 employees to the midlands city from London.
Other towns and cities
Overall, 21 British towns and cities have more than 10,000 people working in finance, according to TheCityUK. It’s unclear how many jobs outside London might be affected by Brexit, which could depend on the deal Britain gets for accessing the EU single market and clearing euro-denominated derivatives.
More than a trillion dollars of Bank of America Corp.’s foreign exchange and derivatives deals are processed daily from a quiet business park near the small northern city of Chester. It’s the bank’s largest European office outside London and one of three global hubs for booking trades alongside Singapore and the lender’s home of Charlotte, North Carolina. Staff numbers have rocketed from a handful six years ago to more than a thousand.
“Clearly London is massively important to us, but so is Chester,” said Stephen Miller, who moved to the city as Bank of America’s global head of foreign-exchange operations.
From Chester to Liverpool, a distance shorter than the London Underground’s Central Line, Andrew Morris sits behind a walnut table in a room with a golden spyglass overlooking the river Mersey, where transatlantic liners once departed for New York.
“For a lot of people, finance is the dark arts,” said the fund manager, who helps oversee £32 billion at Rathbone Brothers Plc, a firm founded in Liverpool in 1742 by a family of timber merchants who grew rich on maritime trade. “People don’t understand the true benefits it brings us as a nation.”
While its main office is now in London, Rathbone employs about 500 in the Port of Liverpool Building, part of the city’s Unesco World Heritage waterfront. “People haven’t come to a backwater,” Morris added. “There are highly skilled jobs here.”
Investment bank Rothschild has been in Manchester for 50 years, but traces its links back much further to Nathan Mayer Rothschild, the first of the banking dynasty to leave the family’s Frankfurt home in the 18th Century. He worked in the city’s then-booming textile industry before founding NM Rothschild & Sons in London in 1810. The firm’s current leading banker in the region, Andrew Thomas, travels into the office by tram or commutes from Manchester Airport to client meetings as far away as Mexico City or New York.
“You sometimes come across people who don’t know Rothschild has a presence outside London,” Thomas said, adding that the firm’s Manchester base helps to win regional deals and can attract staff looking for a better quality of life than in cramped London.
There are about 215,000 finance and related professional services roles in the North West of England, making it the UK’s biggest location for such jobs outside London and the South East, according to TheCityUK.
At its heart is Manchester and the city’s financial district of Spinningfields, a miniature Canary Wharf developed after a Provisional Irish Republican Army bomb in 1996 wrought £1.2 billion of damage. The majority of Royal Bank of Scotland Group Plc’s 5,300 staff in the city are based there, while Barclays and accountancy firm Deloitte also have offices.
“Clearly, there is a degree of uncertainty,” said Richard Topliss, a managing director at RBS based at its Spinningfields offices and chair of the Manchester Growth Company, a development agency.