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Banks Moving Operations Out Of Britain After Brexit

Banks Moving Operations Out Of Britain After Brexit
Posted: Jun 26, 2016 at 4:31 am   /   by   /   comments (1)

Banks have already begun to take action to shift operations out of the UK, with the governor of France’s central bank warning on Saturday that Britain’s financial services groups were at risk of losing their right to operate across the EU, reports Financial Times.

The UK paper reported that investment banks have reacted immediately to Britain’s referendum result, with some of the City’s largest institutions approaching regulators to secure licences and lining up executives to relocate.
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 are now preparing to shift some of this work to cities such as Dublin, Paris and Frankfurt.

The danger to the UK’s financial services sector was highlighted in comments on Saturday morning from France’s central bank governor, who warned that banks would lose “passporting” rights to operate in the EU if Britain leaves the single market.

François Villeroy de Galhau said on Saturday it was “paradoxical” to allow the City of London to operate by the EU’s rules and not be a member of the European Economic Area in the manner of Norway.
The governor of the Banque de France and an ECB governing council member told French radio: “There is a precedent, it is the Norwegian model of the European Economic Area, that would allow Britain to keep access to the single market but by committing to implement all EU rules.”

These first significant comments from a European Central Bank figure make it clear the EU will not give the British financial sector an easy transition.

Lawyers advising US investment banks have warned that the so-called passporting rights they rely on to sell products and services from Britain to EU clients could be partially or entirely abolished depending on the outcome of negotiations over the UK’s exit from the EU.

“We’ll get on with it,” said a senior executive at one large US bank. “We’ve started to think about how we put people in our existing offices and entities in Europe. We are already rebalancing our footprint.”

Comments (1)

  • Jun 26, 2016 at 8:41 am Osaze Igho

    The implications of Brexit are become more far reaching that everyone imagined.

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