LONDON/FRANKFURT • US banks Morgan Stanley and Citigroup have identified many of the roles that will need to be moved from Britain following its exit from the European Union (EU), sources involved in the processes said.
Morgan Stanley, which bases the bulk of its European staff in Britain, will have to move up to 1,000 jobs in sales and trading, risk management, and legal and compliance, as well as in slimming the back office, in favour of locations overseas, according to a source.
Citigroup, which already has a large banking unit in Dublin, will need to move 100 positions in its sales and trading business, sources with knowledge of the matter said.
Leading financial firms warned for months before last June's Brexit referendum that they would have to move some jobs if there was a leave vote, and have been working on plans on how they would do so for the past six months.
More details are starting to emerge after Prime Minister Theresa May confirmed Britain would leave the European single market, ending banks' hopes they might retain "passporting" rights that let them sell their services across the EU out of their London hubs.
HSBC and UBS said last Wednesday that they could each move about 1,000 jobs out of London.
A spokesman for Morgan Stanley said no decisions had been taken with regard to its Brexit plans. A spokesman for Citigroup declined to comment.
Morgan Stanley currently bases the vast majority of its European staff in Britain, employing around 6,000 people there. It has relied on passporting out of London to service it clients elsewhere in the EU.
To continue certain businesses such as trading European securities, it will need to move those operations to a licensed entity in the regional bloc.
The source said given that the bank already had a trading licence in Frankfurt, it was likely to move most of these jobs there despite some of the city's other drawbacks. "We don't like Frankfurt but that's the only place to go," the source said. "Culturally, it is not a vibrant city."
The source added that United States regulators were expected to discourage US banks from moving to countries with a poor country credit rating, such as Ireland and Spain.
Mr James Gorman, chairman and chief executive of Morgan Stanley, told analysts this week that Brexit was "a moving chessboard".
He said: "We like the rule of law in the UK... but to the extent we have to comply with, obviously, the Brexit rules, we will be putting a (head office) somewhere in continental Europe and that will have some implications going forward."
Investment banking roles, such as merger and acquisition bankers, are expected to be able to stay in London. Citigroup, which has almost 60 per cent of its European headcount based outside Britain, has a relative advantage over most other US banks, given its Ireland banking outpost that is regulated by the European Central Bank.
Sources say the bank may have to move 100 or so people in its sales team because of that, although the location has not been decided. "Every business unit is currently discussing where to shift jobs, they won't all go to one location," one source said.