Big investment banks with headquarters in London will start the process of moving jobs from the U.K. within weeks of the government triggering Brexit, according to Bloomberg, citing sources briefed on the plans being drawn up by four of the biggest firms.
The executives are planning for the worst - that they will lose the right to sell services freely around the European Union from the City, said the people, who asked not to be identified because the plans are private.
Banks want to start quickly in order to have new or expanded offices set up in Europe before the end of the two-year Brexit negotiation period.
While U.K. Prime Minister Theresa May has said she will fight for the City of London to retain its passporting rights, bankers and lawyers say she faces an uphill battle trying to win concessions from EU partners still smarting from the outcome of the June 23 vote. Bank executives are privately discouraged that seven weeks after the referendum, the ministers in charge of negotiating the best deal for the U.K. believe they can retain the benefits of being in the single market without accepting the free movement of EU citizens.
Banks are in a race against each other to secure the best office space and accommodation for the thousands of workers they would eventually move from the U.K., given the limited number of suitable destinations in those cities. They also want to be first in line with the local regulators, who will likely struggle to cope with an influx of investment banks asking permission to set up shop.
Before the referendum, JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said he would relocate as many as 4,000 employees to the continent after Brexit. Morgan Stanley may move as many as 1,000 employees out of the U.K., while Goldman Sachs Group Inc. and Citigroup Inc. indicated they would also shift people abroad. European banks including HSBC Holdings Plc and Deutsche Bank AG said they may have to move people or activities to France and Germany.
Beginning in the near future long process won’t mean employees would immediately start moving. The first steps would involve setting up a new legal entity structure with a home base inside the EU, applying to the local regulator for a banking license and getting approval for the internal models they use to calculate their capital requirements.
Banks could yet delay their departure from the U.K. if the British government was able to secure a lengthy transition period from the current rules to whatever fresh terms of trade are agreed with the EU.