The Exodus from London: where can move the main financial hub of Europe


26 Jun CNBC, citing the Financial Times reported that a number of investment banks preparing to move part of the London operations to other cities of Europe. International banks open their offices in the Kingdom and called the right certification, allowing financial institutions to operate in the European economic area (the EEA includes all 28 EU countries, plus Iceland, Norway and Liechtenstein). Respondents FT lawyers warn that Brexit would change the current UK legal framework, with the result that the company will lose the opportunity to work at the European market, and their employees — jobs.

Recently HSBC announced that the Bank can transfer 1,000 jobs in Paris, adding that this decision may be deferred to the official British exit from the EU. “We started to think about ways to transfer our employees to its European division,” the FT said a top Manager of one of the American banks on the condition of anonymity.

According to Jonathan Lewis, one of the managing Directors of Japanese Bank Nomura International, the Bank will take a “wait and watch how the situation develops with Brexit. At JP Morgan Chase back office is situated in Bournemouth, it employs about 4 thousand people, writes Bloomberg. Bank CEO Jamie Dimon 3 Jun met in Bournemouth with the Minister of Finance of the Kingdom of George Osborne and stated that there are risks of reduction of the staff. “We will maintain a significant presence in London, Bournemouth and Scotland, said Dimon in a letter to Bank staff on the results of Brexit-a referendum on June 24. — We can change the structure of our legal entities in Europe and also relocate some of the units. These changes cannot be regarded as guaranteed, but we must be willing to abide by the new laws to continue to provide services to our clients around the world.”

The head of ING Ralph Hamers said in February that the Bank is likely to follow the lead of their competitors and will reduce staff in London if the UK leaves the EU. Now there are 650 employees in a financial institution.

One of the largest based in London international banks, according to the FT, include BNP Paribas (2.5 thousand employees), Goldman Sachs (5.5 thousand), Bank of America Merrill Lynch (4.5 million), Nomura (2.6 thousand), Deutsche Bank (7 million), UBS (4 million), RBS (2 million), Societe Generale (2.8 thousand), Credit Suisse (5.5 thousand), Barclays (8 million), HSBC (5 million), Morgan Stanley (5 thousand), JP Morgan (8 million), Citi (7 million).

The survey showed that the structures of Russian banks in London are not going to change the strategy work. Now in London, work division, Sberbank CIB, VTB Capital, Alfa Bank, BCS and “Open”. Chief Executive officer of BCS Global Markets, a novel Suckers is confident that the exit of Britain from the European Union will require more than one year. “So we are not going in the medium term to revise the strategy in the London office, move it to another jurisdiction or to reduce there the state”, — said Suckers.

Chief financial officer of Alfa Bank Alexey Kuhlow said that in the London office of alpha Bank and so has only a few employees and close office in connection with the Brexit, the Bank’s management, certainly not going. Head of global markets Sberbank CIB Andrey Shemetov said that plans to change to office work in London no, but the head Bank is now closely monitoring the situation.

New centers

“The greatest benefit from Brexit, it seems, will extract Dublin, Frankfurt and Paris”, — said the Agency Bloomberg Joerg Rocholl, the President of the Berlin business school ESMT. The Agency has analysed which countries can take over from London as a financial capital of Europe.

The CEO of Deutsche Bank John Crain told Bloomberg in late may that in the event of Brexit the lender will transfer the trading company from the UK to Germany. Continue to trade in London products in the Eurozone, such as Italian government bonds, if the UK leaves the EU, irrational, said Crain investors (state Deutsche Bank in London has 9 thousand employees). To win that Frankfurt is the second largest financial center of Europe, writes Bloomberg. The city is the headquarters of the European Central Bank, stock exchange Deutsche Boerse hub for trading derivatives Eurex. Fund vacant office space in the financial capital of Germany has to 92.9 thousand square meters, which is comparable to the area of the London skyscraper One Canada Square with a height of 244 m, one of the tallest skyscrapers in the UK.

The CEO of French Bank Societe Generale Frederic Odea said that Brexit could open up “new opportunities” to Paris as the French capital’s role as a banking hub has decreased over the last decade. Now in Paris there is HSBC, the largest European Bank, whose headquarters is in London. Cons of working in Paris include high taxes on wealth, labour legislation, imposing a large burden on employers, as well as the 35-hour working week, says Bloomberg.

Among the competitive financial centres, able to replace the British capital are Amsterdam and Luxembourg, located at a distance of 1.5 hours from the British capital, writes Bloomberg. Credit Suisse recently increased its operations in Luxembourg in order to gain access to customers in other European countries. Two of the largest investment Bank of Geneva, Pictet & Cie. and Lombard Odier, are also expanding their activities in Luxembourg. In Amsterdam, where appeared the world’s first Central Bank and the world’s first stock exchange, is a financial conglomerate ING Groep, as well as one of the world’s largest pension funds — Stichting Pensioenfonds ABP. “The Dutch have always focused on the Anglo-Saxon and international business, — said the Agency Harald Benink, Professor of banking and Finance at Tilburg University. If lenders say they are concerned about access to the European market, Amsterdam is the ideal place where to relocate, given the strong historical ties of the city with the capital markets.” Among the disadvantages of the capital of the Netherlands is one of the highest requirements for capital adequacy in Europe. In addition, the country in comparison with France and Germany, there are not many corporations that banks can provide services.

Brexit can provide inflow into Ireland to invest €6 billion ($6.7 billion), reported the country’s debt management. Dublin would be the “obvious” choice for financial companies, noted the Agency. Dublin can offer to financiers, decided to change place-based, English language and English law. The number of banks that have already moved part of its operations to Ireland, Swiss Credit Suisse. President of Morgan Stanley Colm Kelleher, Irish national, claimed that his Bank could move its headquarters to Dublin or Frankfurt after Brexit. Among the disadvantages of the Irish capital, the relative shortage of office space and high personal income tax, according to Bloomberg

Member of the Treasury Committee of British Parliament mark Garnier noted, “the rudiments of a financial hub in Edinburgh. The first Minister of Scotland Nicola Sturgeon on 24 June is already stated that the second two years a referendum on independence would be conducted “with high probability”.