Top executives from two of the world’s biggest investment banks have warned about the perils of Brexit, saying they have begun to firm up plans to uproot jobs from London ahead of Britain’s departure from the EU.
Banks had been among the most vocal opponents of Brexit in the run-up to June’s referendum, donating millions of pounds to the Remain campaign and speaking openly about the thousands of jobs that could leave the UK. Since the vote, however, they have mostly kept quiet.
But on Tuesday, with just eight days to go until the UK formally triggers its exit and little clarity about how that withdrawal will play out, two of the industry’s best known figures broke cover. Richard Gnodde, chief executive of Goldman Sachs International, told CNBC that his bank had already begun implementing its contingency plans for a post-Brexit world.
“It’ll be a combination of things; we’ll hire people inside of Europe itself and there will be some movement (from London),” he said. He added that the extra jobs in Europe would be “in the hundreds of people” in the first phase. Goldman Sachs at present employs about 6,000 in London.
The bulk of the EU-bound jobs are expected to go to Frankfurt, where Goldman already has a banking licence. Mr Gnodde stressed that the final shape of the bank’s European operations after Brexit would not become clear until there was more certainty about the terms of the UK’s separation from the EU.
The UK may get an agreement that would allow banks to keep most of their staff in Britain, while moving their financial assets and some operational and management staff to the EU. A more restrictive deal could force thousands of staff per bank to relocate.
Rajesh Agrawal, Deputy Mayor of London for Business, said the comments from Mr Gnodde indicated that the “Prime Minister’s negotiating position is unnecessarily risking a ‘Hard Brexit’ that would put our economy and future prosperity at risk.”
“The government must now prioritise an interim deal with the EU that secures the fullest possible access to the single market,” said Mr Agrawal, adding that the “unrealistic” expectation of negotiating the UK’s exit within two years is “compounding uncertainty and risks, causing unnecessary damage to our economy as evidenced by this decision”.
Meanwhile Colm Kelleher, president of Morgan Stanley, told a London conference that his bank, which employs more than 5,000 in the UK’s capital, would “certainly” have to move some people well before the two-year Brexit negotiation period is up.
“Our business model involves all employees who need to live in different places and have children and so on,” he said. “You can’t just order them around like units on the board. So we’re going to be very considered on this. We’re not making grand statements.”
Mr Kelleher said he believed Brexit would be a “bad thing” for London, and for the level of investment bank activity in Europe more broadly.
“You may see some business gravitating back to New York,” he said. “It’s not a disaster, it’s not going to be a blow-up. It’s not going to be the end of London, but clearly, we will have to adjust.”
Mr Kelleher did not offer details of Morgan Stanley’s plans to move staff but said the bank “obviously has to apply for licences now and get ready for it”.
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