Negotiations or not, banks are leaving London

ANDY RAIN

(FILE) A file photo dated 01 February 2013 showing Ddark clouds above London's financial district Canary Wharf, London, Britain. British media on 04 July 2016 report Britain's Chancellor of the Exchequer George Osborne said Britain would cut the corporation tax from the current 20 per cent to less than 15 per cent as an effort to strenghten business investments in UK. The move is seen as reaction to insecurity on UK's economy following the Brexit refendum vote to leave the EU.

Negotiations or not, banks are leaving London


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The time to engage financial services stakeholders and make a transitional deal with Brussels to maintain London’s status as Europe’s banking capital has come and gone, Reuters reports.

Banks are relocating

To guarantee their clients continuity of service after Brexit, banks, insurance companies, and the cluster of accounting and legal consultancies need to be ready by September 2018. For banks that means licensing, new buildings, hiring and/or relocating staff. Calling early elections has also pushed forward action plans, as the “no deal” plan has become more likely.

Banks are moving, with JP Morgan buying floor space in Dublin along with a whole cluster of legal services and insurance companies.

Without the prospect of a transitional agreement in place, top executives from London’s five biggest banks told Reuters on Tuesday that preparation to relocate staff has already begun and it is now too late to engage business in Brexit negotiations.

Last week, finance minister Philip Hammond promised that the UK will push for a transitional deal while the government is beginning to consult with corporate leaders.

Among the bankers speaking to Reuters was James Bardrick, of Citi, who said “it is all a bit late.” Another top executive said he is ready to give the go-ahead by the end of the summer. Meanwhile, the Governor of the Bank of England, Mark Carney, has warned banks to be ready to relocate by September so as to avoid disruption of service.

Paris moves in aggressively

The French Prime Minister Edouard Philippe said on Tuesday that France will do whatever it takes {“all means”} for Paris to succeed London as Europe’s financial capital.

Philippe has pledged to reduce corporate tax to 25%, cut the cost of employing financial services staff, and cut payroll tax on high-earning bankers. France is also moving to reduce the scope of wealth tax to target only real estate.

HSBC has already committed to moving 1,000 jobs to Paris, while Societe Generale has told Reuters it could move up to 400 investment banking jobs.

JP Morgan will disperse its jobs between Dublin, Amsterdam, and Paris.

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