Bankers to ask Theresa May why they should stay after Brexit

LONDON: The bosses of some of Europe’s biggest banks will ask Britain’s Prime Minister Theresa May to give them a reason to stay in the City of London after Brexit now that hopes are fading for a generous EU trade deal.

May will dine with bank and insurance chiefs who are members of the European Financial Services Round Table and discussions could shed light on what the government wants from Europe for financial services.

This group includes banks and insurers from around Europe, such as Deutsche Bank, Societe Generale, Barclays and Aviva.

Barclays’ Chairman John McFarlane is hosting the dinner near the Houses of Parliament where executives will push May and finance minister Philip Hammond for details of their financial services plans.

“We are expecting her to make a statement about why we should stay here,” said one executive who will be attend. “We need clarity, they are not thinking enough about sector and we need to change that.”

Brexit poses the biggest challenge to the City of London’s finance industry since the 20072009 financial crisis as it could mean banks and insurers will lose access to the EU, the world’s biggest trading bloc. For months the government, financial regulators and major banks in Britain have been unified in backing a ‘mutual recognition’ blueprint for two-way market access after Britain leaves the EU next March.

This involves Britain and the EU accepting the broad thrust of each other’s rules, a flexible but largely untested approach in trade compared with the bloc’s current more narrow and demanding mechanism for granting foreign companies access to its markets.

But facing scepticism from Brussels, senior financial executives now say they no longer believe that mutual recognition is realistic, casting a shadow over Britain’s biggest economic sector.

Reuters spoke to senior executives at 12 of the largest banks in London, including the five biggest British banks, and found not one of them privately thought the plan would ever be accepted by the EU.

They are resigned to a deal that will give more limited access.

“I don’t know anyone who really thinks this has a realistic chance, the EU has made it clear they won’t accept it. It is now time to be more realistic about what we can negotiate,” a senior executive at one of Britain’s biggest banks said.