The Daily Telegraph

JP Morgan plans move to beat power cuts

Wall Street giant prepares emergency measures to move work to London amid fears of blackouts

- By Simon Foy and Rachel Millard

JP Morgan has drawn up plans to shift work from Germany into the City of London as finance companies brace for potential blackouts in the EU’S biggest economy. The Wall Street bank is preparing emergency measures so it can continue trading if there are power cuts this winter following Vladimir Putin’s decision to block gas supplies from Russia. Yesterday, the Kremlin announced that the crucial Nord Stream 1 gas pipeline will remain shut until Western sanctions are eased.

JP MORGAN has drawn up plans to shift work from offices in Germany into the City of London as finance companies brace for potential blackouts in the EU’S biggest economy.

The Wall Street bank is preparing a raft of emergency measures so that it can continue trading if there are power outages this winter following Vladimir Putin’s decision to cut off gas supplies from Russia.

It came as the energy crisis gripping Europe deepened, with the Kremlin announcing that the crucial Nord Stream 1 gas pipeline will remain shut until Western sanctions are eased, and the Opec-plus cartel of oil exporting countries agreeing to cut crude output.

The euro fell below $0.99 for the first time since December 2002, dropping by as much as 0.7pc to $0.9878 as wholesale gas prices surged and stocks slumped.

Shares were also hit, with Germany’s benchmark Dax index falling 2.2pc, while France’s Cac 40 stock index dropped 1.2pc. Benchmark European gas prices jumped as much as 35pc.

The market chaos is spurring finance companies to prepare for the worst. JP Morgan is understood to be wargaming options such as shifting work from its Frankfurt base to London and other European offices if Germany is plunged into darkness.

A source added: “Work transfers could also be to and from any location, not just involving the UK.”

JP Morgan – which moved billions of dollars of assets from London to Frankfurt in the wake of the Brexit vote – could also fire up diesel generators at its offices that would allow them to function for several days without mains power, or tell staff to work from home to reduce energy consumptio­n.

The plans have been put in place as a precaution and the bank currently has no intention of activating any of the measures, it is understood.

A source said: “It would take a perfect storm of a complete shutdown of Russian gas supply, no reduction of gas use at all and little alternativ­e sourcing for gas before it would have real impact on our business.”

Germany announced €65bn (£56bn) of fresh financial help for households and businesses over the weekend, as well as a windfall tax on energy company profits. In addition the country has decided to keep two of its remaining three nuclear power stations on standby this winter instead of closing them at the end of the year.

Robert Habeck, economy minister, said the Isar II plant in Bavaria and the Neckarwest­heim facility in Badenwürtt­emberg would form an “operationa­l reserve” until April.

Brussels is also considerin­g a European Union-wide tax on electricit­y generators amid a scramble to try to curb the cost of living, with energy ministers due to discuss the proposal at a meeting on Friday. The plan was backed yesterday by Emmanuel Macron, France’s president, who said he supports a “European mechanism which we’d ask for from European energy operators whose production costs are far lower than market sale prices”.

Many wind and solar plant owners are believed to be making huge profits because wholesale prices have soared but their costs have not.

In both the EU and the UK, wholesale electricit­y prices are tied to the price of gas, even if electricit­y has been generated from other, cheaper sources.

Gas prices are 10 or more times higher than long-term averages as Russia restricts supplies to Europe.

Meanwhile in an effort to reverse a drop in crude prices, Opec-plus – which includes Russia and Saudi Arabia – decided to cut output by 100,000 barrels per day next month in an effort to bolster prices. Brent crude climbed 2pc to more than $95 a barrel yesterday.

JP Morgan declined to comment on its contingenc­y plans. Goldman Sachs and Barclays also declined to comment on any plans they have for potential power outages.

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