LONDON - Senior Goldman Sachs Group and Morgan Stanley executives said they are preparing to move staff and operations from London to elsewhere in the European Union as Prime Minister Theresa May sets up the United Kingdom's exit from the bloc.

A day after Mrs May's office announced she will open two years of divorce talks with the EU next Wednesday, Goldman Sachs' co- head of investment banking Richard Gnodde told CNBC on Tuesday that his bank will initially relocate hundreds of London-based employees to expand other offices after the split. "We'll hire people inside of Europe itself, and there will be some movement,'' he said.

The remarks come as unnamed officials were quoted by Reuters as saying banks in London that relocate operations to the euro zone after Brexit are likely to be spared a lengthy entry test by regulators, making it easier for them to move.

Brexit may disrupt the financial industry more than others if the UK's separation from the EU costs banks their ability to easily serve consumers and companies across the region.

United States banks currently work throughout the bloc from bases in London, but the so-called passporting rights enabling that are unlikely to be extended once Britain has pulled out.

Goldman Sachs is considering making Frankfurt its hub inside the EU and could move as many as 1,000 employees, including traders and senior managers, a person familiar with the matter has said.

Morgan Stanley president Colm Kelleher told a conference in London that he would "certainly" have to move some people, though the bank will avoid making "grand statements". "It's not going to be the end of London,'' he said. "But clearly we will have to adjust."

Morgan Stanley is scouting for office space in Frankfurt and Dublin for an enlarged EU hub, people with knowledge of the matter said last month. It may initially move about 300 workers to one of the cities.

Meantime, Royal Bank of Scotland Group chief Ross McEwan said his bank has options in the Netherlands, Ireland and Germany if it decides to transfer jobs.

BLOOMBERG, REUTERS