Out-Law News 2 min. read

BREXIT: More financial firms making plans to relocate staff and services


The speed at which UK financial firms are making plans to move some staff or part of their operations to mainland Europe ahead of the UK's departure from the EU is increasing, according to analysis by EY.

While the firms that have published details of their contingency plans remain in the minority, the number that have publicly voiced their intention to make staff or operational changes has increased by around 50% in the past four months, according to EY. Just under half of the 47 investment banks, 10 of the 37 insurers and 12 of the 52 asset management firms monitored by EY as part of its 'Brexit tracker' have now publicly announced their intentions to move some of their operations.

Separately, Reuters has suggested that up to 9,000 UK financial services jobs could be relocated after Brexit. Its figures, which are based on public statements and "information from sources", include 4,000 jobs at Deutsche Bank, 1,500 at UBS and 1,000 jobs at each of Morgan Stanley, Goldman Sachs and HSBC.

Omar Ali, EY's head of UK financial services, said that the numerous recent announcements by financial firms were "driven by the tight timetable rather than politics".

"The more complex the organisation, the longer it is going to take to create workable contingency options, and so investment banks in particular are putting their plans on record," he said.

"Notably, though, the majority of firms are maintaining their commitment to the UK, and still talking about moving only the resources necessary to maintain a smooth service for their clients. The variety of locations firms are selecting only confirms the fact that the UK's financial ecosystem is unique and very hard to replicate in other European jurisdictions," he said.

Eight of the UK's biggest investment banks have publicly spoken about their Brexit contingency plans in the last two weeks, including Deutsche Bank, JP Morgan and Standard Chartered, according to EY. Insurance market Lloyd's of London announced plans in March to set up a subsidiary in Brussels, with the intention that it would be "ready to write business" in time for the January 2019 insurance renewal season unless there are issues with regulatory approval.

The Bank of England has written to UK financial services firms asking them to send a summary of their post-Brexit contingency plans to the Prudential Regulatory Authority (PRA) by July. The PRA will use the responses as part of its own planning, and will share the information with sister regulator the Financial Conduct Authority (FCA).

Separately, Reuters has reported that banks headquartered in other EU member states could be subject to far more stringent capital requirements post Brexit. Banks including Deutsche Bank, BNP Paribas and Societe General currently operate in the UK through a branch structure but are headquartered elsewhere. However, these banks could be required to set up fully-regulated subsidiaries if they wish to continue operating in the UK post-Brexit if the UK is unable to reach a suitable agreement with the European Commission, according to reports.

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