JP Morgan could eventually relocate a quarter of its 16,000 workforce currently based in the UK unless a Brexit deal closely mirrored existing arrangements for pan-European dealings in the financial sector, the US bank’s chief executive warned in Davos.

JP Morgan considers jobs relocations

In an interview with the BBC at the World Economic Forum, Jamie Dimon, JP Morgan Chase CEO and president, said the bank would not need to make drastic cuts in its City staff as soon as Britain left the bloc next year, but said 4,000 or more jobs could leave eventually.Many banks are drawing up plans to establish post-Brexit European hubs in places such as Frankfurt, Dublin and Paris amid fears that the UK will lose the ‘passporting rights’ that currently allow City institutions to trade freely across the continent.

UK seeks regulatory ‘equivalence’ from Brexit

In an interview with Bloomberg TV in Davos on Thursday, Chancellor of the Exchequer Philip Hammond said that while financial services would be part of a Brexit deal, he said the UK was now seeking regulatory ‘equivalence’ to facilitate cross-border trade, rather than trying to maintain passporting rights.

Benefits a London base provides

Mr Dimon, who had previously spoken of moving 500-1,000 jobs from London, said, “If we can’t find reciprocal recognition of rules – and there are a lot of people who are mad with the Brits for leaving and want their pound of flesh – then it could be bad. It could be more than 4,000.“We love London, we love working there. We’ve got, as you point out, huge efficiencies for us. Huge efficiencies for the eurozone too. But if they determine that you can’t have reciprocal trade practices and reciprocal regulations, it would be a lot.”

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Passporting rights after Brexit

Many bankers no longer believe the UK will retain passporting rights – and Mr Hammond now seems to concur – and, instead, hope some sort of regulatory equivalence between Britain and the EU can be agreed.Equivalence would effectively mean the UK transferring existing EU financial regulations on to its own statute book, allowing banks and financial services companies to continue operations on both sides of the Channel without breaking any rules.This year, an EU equivalence directive – the Markets in Financial Instruments Directive II – is due to come into force, which some analysts believe could effectively negate the loss of passporting rights by giving financial institutions outside the European Economic Area the ability to operate across the bloc, as long as they meet EU financial trading standards.In his interview with Bloomberg, Mr Hammond said financial services would be part of any Brexit deal EU but on the basis of regulatory equivalence rather than on passporting.“Financial services have to be part of our relationship with the European Union because they’re such a large and important part of our economy,” the chancellor said.“And we can operate without passporting, through some kind of enhanced equivalence regime, but it has to be a regime that is robust and that is objectively determined. It can’t be something that is dependent on the whim of the European Commission, it’s got to be more robust than that.”A government spokesman in London said ministers were determined to maintain London’s competitiveness “now and in the future”, including a partnership with the EU “based on our rules and regulations being the same at the start and on our shared belief in free trade and a commitment to high regulatory standards”.

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Read more about the future of UK business in the Winter issue of our magazine 

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