Banks tread warily ahead of break-up

Banks are treading carefully, enacting two-stage contingency plans to avoid losing nervous London-based staff as they work out how many jobs will have to move to continental Europe as Britain exits the EU.

British Prime Minister Theresa May will trigger formal EU divorce proceedings on Wednesday, launching two years of negotiations that will shape London’s place as a global financial centre. The move will also mark the point when investment banks begin taking concrete steps to prepare for Britain being outside the bloc.

“Everybody is prepared for a cliff edge scenario, which means you need to more or less have, in a very short period of time, people on the ground making sure whatever happens, you are set,” said Hubertus Vaeth, head of Frankfurt Main Finance, a group that promotes the city.

The first phase involves making sure licences, technology and infrastructure are in place, while the next requires longer-term thinking on what their European business will look like in future.

Bank executives say moving significant numbers of jobs is likely to form part of the final adaptation to Brexit, but will not happen before any final deal is struck.

“Don’t look for a ‘big bang’ the day after Brexit in March 2019,” a senior executive at an international bank said. “The jobs that will move, the impact will be known in 2025 and 2030 not 2019,” the executive said.

Banking sources said that in the initial phase, staff moves were expected to be in the low hundreds, with the majority not taking place until at least 2018.

“It’s not staff moving, it’s jobs moving,” said one source.