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For months, banks in the UK had rumoured to have been drafting up contingency plans in case the country decided to leave the European Union (EU).
Now that Brexit has occurred, it looks like job cuts in London are coming sooner rather than later.
Back in February, HSBC chief executive officer Stuart Gulliver said the bank would probably move about 1,000 investment bankers to Paris if Britain withdraws from the EU.
That may become a reality soon.
The BBC has reported that staff who would be relocated would be those who have processed payments made in euros for HSBC in Canary Wharf.
HSBC, which carries out a significant amount of its business in Asia, reportedly considered moving its headquarters to Hong Kong earlier this year. But the company decided to remain in London in part due to the city’s status as the main financial centre of Europe.
Douglas Flint, HSBC’s chairman, told The Independent last Friday: “The work to establish fresh terms of trade with our European and global partners will be complex and time consuming. We will be working tirelessly in the coming weeks and months to help our customers adjust to and prepare for the new environment.”
A number of other large financial companies have reportedly also made plans to reduce the size of their businesses in the UK.
Jamie Dimon, JP Morgan chief executive, also allegedly warned employees before the referendum on exiting EU that as many as 4,000 jobs could be shifted out of the UK.
After the poll was out, Dimon sent an internal memo to employees whose jobs are at risk of being terminated or relocated. He said the bank would stay in the UK to work with local clients and expressed hope that future trade deals would see value in UK and European engagement.
Daniel Pinto, chief executive officer of Corporate & Investment Bank, whose investment banking unit employs most of JP Morgan’s 16,000 staff in Britain told the Financial Times that the bank hoped to keep most of its UK investment bank intact.
The bank would “need to figure out a way to deal with” some specific products and services, such as global custody and corporate deposits, but he said any moves would be gradual.
“We will not start moving people until we have clarity on what we will be allowed to do from the UK once the negotiations [on the terms of the country’s exit from the EU] start to take shape,” he said.
Goldman Sachs CEO, Lloyd Blankfein, also apparently wrote a memo to the bank’s 6,000 employees to remind them that this vote will not signify an instant change, but that a lengthy process to increased isolation will begin.
In another internal memo, Blankfein asked employees to trust Goldman’s ability to weather change and stated a commitment to working with relevant authorities as the terms of the exit become clear.
Here are the two memos via Business Insider.
Morgan Stanley was previously reported to be moving jobs in euro clearing as well as other investment banking functions and senior management.
But last Friday, spokesman for the bank told The Independent that those reports were untrue and that the bank has no immediate plans to make changes.
“The UK’s vote to leave the European Union is a very significant decision which will have a considerable impact, the extent of which will not be known for some time,” the spokesman said.
“There will be at least a period of two years before an actual exit takes place, so there will be time to implement any changes required to adjust our business to the new environment. Morgan Stanley will continue to monitor developments very closely and will adapt accordingly while prioritising the interests of our clients, our shareholders and our employees,” he added.
Jonathan Lewis, head of Japan’s Nomura International, which employs about 2,600 staff in London, said it would have to “wait and see” how things unfolded before making any big decisions about its locations or operating structures.