A survey of leading bankers around the world by Boston Consulting Group suggests that 80,000 banking and finance jobs could ultimately leave London for Europe in the wake of the Brexit vote, creating more employment damage for the capital than the 2008-09 global financial crisis.
The big US banks – JP Morgan Chase, Goldman Sachs, Bank of America, Citigroup and Morgan Stanley — have large operations employing tens of thousands of people in the UK. They have historically set up their regulated businesses in Britain and then used its right to “passport” into the rest of the 28-member bloc. (Passporting allows financial institutions based in the UK to sell their products throughout Europe, despite not being part of the single currency.)
But lawyers are warning that after Brexit, they would likely need a new legal home base, so they are preparing to shift at least some work to cities such as Dublin, Paris and Frankfurt.
London staff numbers of global investment banks (source Financial Times)
|Bank of America Merrill Lynch||4,500|
JP Morgan boss Jamie Dimon has warned that the bank, which currently has its European headquarters in London, could move thousands of jobs out of the UK if the country’s banks lose their ‘passport’. He told Italian newspaper Il Sole 24 Ore on 7 July: “If we have that passport after Brexit, we likely would not have to make any change at all. But I think the European Union will not accept that. It will put more conditions on the UK and might force banks to become smaller in London. The worst case is that we might have to relocate a few thousand people to other offices in the eurozone.”
Richard Gnodde, co-head of the Investment Banking Division of Goldman Sachs, has said he would not rule out moving some or all of the bank’s 6,500 UK staff members to Europe. When asked about Goldman’s post-Brexit plans at The Times’ CEO Summit on 28 Jun, he said “every outcome is possible” and added: “If passporting was totally removed, we would have to adjust our footprint and where people were located.”
HSBC said before the vote that it could move as many as 1,000 trading jobs to Paris in the event of a Leave. But because the bank already has a Paris office, it could defer any decision until right before the UK’s exit comes into effect.
Morgan Stanley previously warned that 1,000 of its London jobs could move in the event of a Leave vote.