UK banks look for Brexit clarity

HSBC chairman Douglas Flint says some banks may begin triggering contingency plans in March this year when formal divorce talks start if there is no clarity on whether Britain will retain access to the European single market when it leaves the EU.

LONDON (REUTERS) - For Britain, Article 50 looms - the mechanism to trigger divorce talks with the EU coming up fast.

That means key decisions for UK financial services - on whether to trigger their Brexit contingency plans.

UK Treasury Select Committee Member, Chris Philp, asked: “Can you just clarify for the committee the likely timing of the implementation of those contingency plans were no guidance to be forthcoming?”

HSBC Chairman, Douglas Flint, replied: “For those businesses that don't have infrastructure already in place in Europe, it will start pretty much immediately on the triggering of Article 50.”

And with little guidance coming, one possible contingency is an exit of leading banks from London.

That and other Brexit worries keeping sterling at a two-month low on Tuesday (Jan 10).

Traders struggle to put together pieces of a puzzle: the government's yet to be defined exit strategy.

Wilson King Investment Management’s Head of Research Richard Hunter said: “We are still waiting to get some meat on the bones. At this stage, most of this has been rhetoric and speculation.”

But with the UK's position as Europe's financial centre seemingly at risk, UK financial services themselves are stepping up efforts to lobby European officials.

Finance not only Britain's biggest industry - but vital for Europe's economic strength too, the argument goes.

Hunter added: “It's fair to say that whilst banks are drawing up contingency plans, equally they're hoping that government recognises the importance of the financial industry in the UK and ensures that some kind of deal is undertaken such that banks can continue being headquartered either in London or in the UK.”

Britain still the destination of choice for many banks perhaps - even as Europe beckons.