Financial regulator joins warnings over bank moves
Relocations of financial firms out of London will become irreversible over the coming months, suggests head of UK’s financial watchdog. The warning follows the BoE’s most recent job loss cautions.
1 November 2017
Andrew Bailey, the head of the UK’s financial watchdog, has become the latest senior official to warn that British-based banks will start the “irreversible” process of relocating staff from London offices to new, European hubs by early next year unless a meaningful Brexit transition deal is struck.
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He said firms were very conscious of the Brexit deadline at the end of March 2019 and would have to take action in advance, either by persuading staff to move abroad, or by recruiting in labour markets that are “often much tighter for skills they want” than what they currently encounter in the UK.“So that is why they – and we – tend to take the view that the end of this year, beginning of next year, is the point at which these things start happening,” Mr Bailey said.“Each firm will no doubt give you a slightly different date if you push for precision, but I think that’s the sort of date to have in mind when things start to happen that have much bigger consequences.“You can call it hard Brexit, you can call it no deal, but there is no inbuilt assumption that something good happens in this negotiation that in a sense, that, you know, saves the day.”For related news and features, visit our Brexit section.Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.
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Value of the Brexit transition period
Mr Bailey, chief executive of the Financial Conduct Authority (FCA), told a committee of MPs that the value of an agreement of a Brexit transition period was in danger of beginning to erode by the start of 2018 with financial firms unlikely to back-track on relocation once they had started implementing their contingency plans.The BBC has reported that the Bank of England believed that up to 75,000 City jobs could move to new European hubs on the continent unless a deal was reached between London and Brussels on future arrangements for financial services.Mr Bailey’s comments to the House of Commons’ Treasury Select Committee came on the heels of a glut of warnings during October over the urgent need to resolve post-Brexit arrangement for the financial industry.Relocations expected to come in March
Sir Howard Davies, chairman of RBS, warned that banks in London would start to relocate by March unless a deal was reached; TheCityUK lobby group came up with a similar message in a report, suggesting that the eventual winners might not be other European cities trying to attract London-based firms, but New York and Singapore; the City of London Corporation wrote to Chancellor of the Exchequer calling for speedy agreement on a transitional deal to prevent financial services from relocating; and the UK’s five largest business organisations have issued similar calls to the government.Additionally, Felix Hufeld, the head of BaFin, Germany’s financial regulator, said in a speech in London last week that UK-based financial services firms should speed up implementing their contingency plans for relocating because the sector would reach the “point of no return” early in the New Year over a Brexit deal.Mr Bailey told the Commons committee, “They (the banks) are already taking positions – for instance, they’re renting buildings in places at the moment. I think they would regard those sorts of decisions as, essentially, fairly reversible.“I think where it really starts to get more irreversible or at least harder – and this is what they all tell me – is in terms of staff, and that is two parts: one is either relocating staff or hiring staff.”Related stories:
- BoE ‘believes 75,000 city jobs could relocate’
- UBS revising plans for mass relocation from London
- Business chiefs unite in call for ‘urgent’ transition deal
He said firms were very conscious of the Brexit deadline at the end of March 2019 and would have to take action in advance, either by persuading staff to move abroad, or by recruiting in labour markets that are “often much tighter for skills they want” than what they currently encounter in the UK.“So that is why they – and we – tend to take the view that the end of this year, beginning of next year, is the point at which these things start happening,” Mr Bailey said.“Each firm will no doubt give you a slightly different date if you push for precision, but I think that’s the sort of date to have in mind when things start to happen that have much bigger consequences.“You can call it hard Brexit, you can call it no deal, but there is no inbuilt assumption that something good happens in this negotiation that in a sense, that, you know, saves the day.”For related news and features, visit our Brexit section.Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.
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