Exodus of London banks 'could start early next year'

Senior executives of financial institutions fear the tougher rhetoric by Britain's government on immigration could hurt the economy. They are also keen to retain the "passporting" rights which allow them to sell financial services across the EU.
Senior executives of financial institutions fear the tougher rhetoric by Britain's government on immigration could hurt the economy. They are also keen to retain the "passporting" rights which allow them to sell financial services across the EU. PHOTO: BLOOMBERG

Staff will be moved out if there is still no clarity on Britain's access to EU market: Lenders

LONDON • Top bankers have warned they could start moving staff abroad as early as next year if there is no clarity on whether Britain will retain access to the European single market when it leaves the EU.

Senior executives from European divisions of some of the world's biggest financial institutions told a conference on Tuesday they felt the government's tougher rhetoric on immigration risked harming the economy.

Mr James Bardrick, the UK head of US bank Citi, said the main dilemma facing the finance industry was how urgently it needed to act on contingency plans aimed at protecting their businesses, following Britain's vote in June to leave the EU.

British Prime Minister Theresa May has said she would trigger the two-year process to leave the European Union by the end of March and last week appeared to prioritise capping immigration over retaining access to the single market.

The future of London as Europe's financial centre is expected to be a major negotiating point in Mrs May's talks with EU partners, with banks keen to retain the "passporting" rights which allow them to sell financial services across the bloc.

Financial services minister Simon Kirby told the conference that getting the best deal for the City of London will be an "absolute priority".

ON BEING SHUT OUT

If we are outside the EU and we don't have what would be a stable and long-term commitment to access the single market, then a lot of the things we do today in London, we'd have to do inside the EU 27.

MR ROB ROONEY, CEO of Morgan Stanley International

Mr Rob Rooney, chief executive officer of Morgan Stanley International, said his bank would have to move parts of their operations from London if Britain were shut out of the single market. "If we are outside the EU and we don't have what would be a stable and long-term commitment to access the single market, then a lot of the things we do today in London, we'd have to do inside the EU 27."

Separately, Mr Jacob Rees-Mogg, a Conservative lawmaker and member of the Treasury Select Committee who campaigned for Brexit, told Reuters that banks needed to take responsibility for their own affairs in line with their contingency plans.

"If the City has to do anything, it needs to do it now," he said, when asked about the threat of a major bank exodus from Britain. "Bank lobbyists are going down the wrong route on Brexit. They just seem to be whingeing."

Mr Tim Roberts, managing director of consulting firm Promontory Financial Group, said London began to rival New York as a financial centre in the 1980s because it welcomed people regardless of nationality or gender. "If we lose that, and we allow not Brexit itself, but some of the sentiments expressed nationally that led up to the referendum to erode that culture, then I think it damages London as a financial centre."

The government backtracked on a recent proposal to make companies list their foreign workers after an outcry from business groups, which said any initiative to "name and shame"employers would be divisive and discriminatory.

"We have to be very clear that the rest of the world is looking very, very closely right now," chairman of the Lloyd's of London insurance market John Nelson said. "We have to be careful that we keep the United Kingdom open... and making sure we are able to attract the right talent globally. If we don't do that, we will not remain the financial sector that we are today."

REUTERS

A version of this article appeared in the print edition of The Straits Times on October 13, 2016, with the headline 'Exodus of London banks 'could start early next year''. Print Edition | Subscribe