Banks have accelerated the fall in business in London for Brexit

Major investment banks, have placed European headquarters in London, will begin the process of withdrawal of the state from the UK in a few weeks after Prime Minister Theresa may will start the procedure of withdrawal from the European Union, told Bloomberg sources familiar with the plans of the four large credit institutions. More recently, banks have said they will watch the negotiations between London and Brussels, before taking decisions on the timing of the transfer of employees and their quantity, the Agency said.

The fear of uncertainty

The London-based banks have so-called right of certification, which allow them to work in the European economic area (the EEA includes all 28 EU countries, plus Iceland, Norway and Liechtenstein). According to the source, who asked not to disclose their names, Bank executives are alarmed by the lack of a plan to preserve the UK’s status as a global financial center and preparing for the possibility that city will lose free access to the EEA, it would close for them work opportunities on the European market. According to sources Bloomberg, banks want to create new or additional offices in the EU before the end of negotiations on the UK’s exit from the bloc.

Formal negotiations should start in early 2017 and to last for two years. To begin the process of negotiations, the British government has until the end of the year to submit to Brussels the official statement on withdrawal from the EU under article 50 of the Lisbon Treaty. The EU calls on Theresa may to do it as soon as possible, believing that “any delay only unnecessarily prolong the uncertainty.” For its part, may said that will make it not earlier than 2017, as the new British government needs time to prepare for the negotiations.

“This whole year will be spent on understanding the potential scenarios, options and possible plans,” said the Agency head of Affairs Brexit in PwC’s Andrew gray, who advises banks on their work after a referendum in the UK. — To execute some of the plans takes time, and companies can’t wait until January 2019, and the risks are not allowed to do business”.

Talks without optimism

While the Mae stated that it would maintain London “passport” of the EU, bankers and lawyers believe that it will be difficult to win concessions from European partners, still has not recovered from the results of the referendum, says Bloomberg. According to interlocutors of Agency, top managers of banks disappointed that after seven weeks of voting by British Ministers responsible for the negotiations with the EU, saying they can keep the benefits from the presence in a single market without the introduction of free entry for EU citizens.

Given the limited number of directions for transfer of business (previously a potential replacement city called Frankfurt, Dublin, Paris, Amsterdam and Luxembourg) and the lack of suitable real estate in these cities, banks began to compete with each other to possess the best office spaces for staff, which they transferred from the UK, writes Bloomberg. In addition, the Agency said, banks want to take first place in the queue to local regulators issuing permits to conduct business.

Among the largest foreign banks with offices in London, according to the Financial Times, included 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) and Citi (7 million).

Particularly acute problem probable exclusion of London from the EU stands for major us banks, says Bloomberg. A significant portion of received revenue in Europe brings customer service out of the EU, work in London 87% of employees in European units of U.S. investment banks.

Shortly before the referendum the head of the U.S. JPMorgan Chase & Co. Jamie Dimon said that in the event of a British exit from the EU, the Bank will transfer from London to the continent 4 thousand employees. Morgan Stanley, the Agency may transfer about 1 thousand employees. Do not exclude the transfer of state Goldman Sachs and Citigroup. European banks, including HSBC and Deutsche Bank, are considering the transfer of business or employees in France and Germany.

As pointed out by Bloomberg, the Bank can not transfer staff from London instantly: first, it needs to register a new legal entity with a head office in the EU, then apply to the local regulator with a request for a banking license and to obtain permission to use internal models to calculate the amount of capital requirements.