Second wave of London bank moves ‘likely after Brexit’

At a finance summit in Frankfurt the UK’s director general of financial services warned of a new wave of Brexit related bank relocations as the relationship between the UK and the EU becomes apparent.

Frankfurt financial skyline
There is likely to be a “second phase” of job relocations among London-based banks after initial moves prompted by Brexit, a senior official at the UK Treasury has conceded.

Second wave of Brexit relocations

Katharine Braddick, the Treasury’s director-general of financial services, played down the scale of the immediate exodus arising from the UK’s loss of ‘passporting rights’ – which currently enable London-based institutions to trade freely throughout Europe – when the nation leaves the European Union.But she told the Frankfurt Finance Summit that there was likely to be a second wave of relocations once the future relationship between the UK’s and EU’s finance sectors became clear.

Brexit finance destinations

Several London-based banks are already implementing plans to establish new, post-Brexit European hubs in cities such as Frankfurt, Paris and Dublin. Frankfurt Main Finance has estimated that up to 25,000 jobs could leave London with almost half of them heading for Germany, although research by consultants believe the overall total could be more like 10,000.Ms Braddick told the conference, “What we see in the UK is an initial set of moves which are to do with essentially hedging the immediate risks to ensure that clients and boards can be assured that services continue in a way that is not only undisrupted, but completely sound from a regulatory and legal standpoint. And that first phase of moves is, I think, relatively confined.”But she added that, as the future regulatory framework became clearer, she said there was expected to be a second wave of relocations.“Depending on the relationship that we achieve with the European Union – and, of course, our aspiration is a very close relationship on financial services – that will determine the scale of that second phase and, to me, that’s currently unknown,” Ms Braddick said.
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Harmonising regulations after Brexit

Jeroen Dijsselbloem, former president of Eurogroup, the eurozone finance ministers’ body, told the conference that he hoped there would be the closest collaboration between EU and British regulators after Brexit to minimise divergence and make the financial system stable. “Banking union must be absolute priority,” he said.However, according to a report in the Financial Times, the British themselves are at “loggerheads” over the future of the future of City of London regulation after Brexit, with the Treasury and Bank of England disagreeing over the future course of action.“Chancellor Philip Hammond wants to keep Britain close to the EU rule book to ensure maximum access for City institutions to the European market, while the BoE is opposing any compromise that would leave it as ‘a rule taker’,” according to the newspaper.“A fragile truce between the Treasury and the central bank has been shattered by the growing fear in London that the EU will not accept Britain’s original proposal for City regulation — a ‘mutual recognition’ plan that would have given the BoE the regulatory autonomy it seeks.“That proposal was declared dead at the outset by EU chief negotiator Michel Barnier. The search for a Plan B has generated acrimony, with the BoE believing that Mr Hammond, in the hope of securing an EU trade agreement in financial services, is willing to sign up to a deal that would give Brussels significant sway over the City.”For related news and features, visit our Brexit section.Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.Global Mobility Toolkit download factsheets resource centreAccess hundreds of global services and suppliers in our Online DirectoryClick to get to the Relocate Global Online Directory