Morgan Stanley the latest to eye European hub in Frankfurt

Frankfurt is again highlighted as the most attractive city for businesses during Brexit negotiations. Morgan Stanley is moving 200 jobs to Frankfurt, to ensure smooth business following Brexit.

Morgan Stanley is moving 200 jobs from it's London office to Frankfurt
US investment bank Morgan Stanley has become the latest financial company to opt for Frankfurt as the site of its post-Brexit EU hub in a move likely to result in 200 jobs relocating from the City of London, according to press reports.

Morgan Stanley follows in Citicorp’s footsteps from London to Frankfurt

After Citicorp's decision to establish its post-Brexit EU hub in the German city, it is reported that Morgan Stanley will apply for a licence with the German regulator that will allow it to continue trading across the EU after Britain leaves the EU and loses the 'passporting rights' that currently enable London-based institutions to operate freely throughout Europe.Morgan Stanley's existing Frankfurt office currently has 200 staff – a figure likely to double with the moving of staff from London, where the bank currently employs 5,000 people in its European headquarters. The company is also expected to increase staff in both its Dublin and Paris offices.
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Although Morgan Stanley has declined to comment on the reports, a source inside the bank privately confirmed the Frankfurt plans to the Guardian. He said, “Come 2019, we might not be able to service [EU] business out of London. To do that we need a European hub, a regulated entity with capital and risk management. We need to establish a second main hub to London in Europe.”Like Citicorp, however, Morgan Stanley looks set to retain London as its main European headquarters.Morgan Stanley is also planning to apply for a licence to set up a fund management company in Dublin under the Markets in Financial Instruments Directive (MiFID), according to the Irish Times on Friday.“Such a move will allow Morgan Stanley to continue to market its funds in the EU. The actual money managers making day-to-day decisions on investments will remain outside of Ireland (ie, in London),” the newspaper reported.On the movement of staff to a new EU trading centre in Frankfurt, the report added, “Sources told The Irish Times that the choice of Frankfurt was merely taken to ensure that the group had an operation up and running by March 2019, when the UK is scheduled to exit the EU, and that this does not mean that the city will be the long-term location for the broker-dealership.”

Will London maintain banking rules that ensure its access to Europe?

The New York Times commented, “With Britain locked in negotiations with the European Union over their post-Brexit relationship, the financial companies that dominate London’s economy have forged ahead, eager to ensure they can continue to serve clients across the Continent. That has set other European cities scrambling to win a slice of the business that the British capital has long kept for itself.“The (Citicorp) development is largely symbolic, with a relatively small number of staff members in London expected to move to Germany. But it is another trickle of job losses that some British business and political leaders fear could turn into a flood in the coming months and years, as the full picture of the nation’s future trading relationship with the European Union becomes clear.“Britain’s membership in the 28-nation bloc has bolstered London’s position as a global financial hub in part because European rules allow 'passporting', under which a banking license in a single member-state allows a lender to work throughout the European Union.“But it is unclear whether Britain will be able to retain that access. Other questions affecting banks also remain unanswered, including whether European citizens will be able to continue to live and work in Britain, and if so, under what sort of visa.”
Read David Sapsted's article on Establishing Right to Remain – which discusses the uncertainty over immigration which the UK faces following Brexit – in the Summer 2017 issue of Relocate Magazine.
For related news and features, visit our Brexit section.

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