Dublin has been the ‘clear winner’ of the shift in financial service activities from London to other European cities due to Brexit, according to almost a third of the companies that have moved at least some functions out of the financial district of London (known as the ‘City’). Of the 405 organisation that have relocated parts of their operations to another European country, 115 have chosen Dublin, according to a report published by New Financial, the think-tank.
Heavyweight banks to have plumped for the Irish capital include Bank of America, JP Morgan and Barclays, which has moved £160bn of assets to the Irish capital, according to the report ‘Brexit & the City: The impact so far’. Asset managers Vanguard, Goldman Sachs, Morgan Stanley Investment Management, Aberdeen Standards Investments, Hermes and State Street Global Advisors, have also moved activities to Dublin, along with Aviva and Royal London, the insurers.
The findings place Dublin considerably ahead of other EU financial centres, Luxembourg has secured the Brexit-refugee business of 71 companies, Paris 69, Frankfurt 45 and Amsterdam 40.
Financial services companies and banks that have moved staff or set up new entities in the EU, have risen by 23 per cent since March. The scale of movement away from London suggests that the value of any post-Brexit trade deal may now be “relatively limited”, according to New Financial.
However, the report said London will remain the dominant financial centre for Europe for the foreseeable future. “Firms are keen to keep as much of their business in London as possible and even the biggest relocations represent a maximum of 10 per cent of the headcount at individual firms.” the report said.
An analysis of firms showed 60 more of them have made some form of shift since the research group reported its first round of analysis in March, an increase of almost a quarter.
The French capital has benefited from the most recent wave of banking moves, with 28 financial companies moving to Paris over the past eight months. New Financial said the moves so far are not on a scale that could represent an existential threat to the City.
But it said that the latest numbers probably “significantly understate the real picture”, with a slew of further moves expected after the “dust settles on Brexit, temporary arrangements agreed between the EU and UK expire, and local regulators require firms to increase the substance of their local operations.
The authors of the report Eivind Friis Hamre and William Wright wrote: “The shift in staff, business and legal entities will gradually chip away at the UK’s influence in the banking and finance industry, not just in Europe but around the world.”
The government tried to reassure firms in the financial district with plans for a new Financial Services Bill, announced as part of the Queen’s Speech last month, which promised to streamline the way overseas investment funds can be sold in the British market after the UK leaves the EU.
But given the uncertainty surrounding the deal, the “damage” to the UK’s banking sector has already been done, the New Financial report said, with companies already pumping “tens or hundreds of millions of dollars into relocation” in preparation for the worst-case scenario of a no-deal Brexit.
This has effectively diminished the benefits of any future deals the UK could strike with the EU around financial services, the think-tank concluded. The report observed a “small boost to the City from the ‘reverse Brexit’ effect”, having identified a “small number of firms” that have applied for authorisation in the UK. But it noted the overall business flow remained out of the UK to the EU.
In a survey of 1,203 asset management staff conducted by CFA UK, the professional body, just 65 per cent said they intend to continue to working in the country post-Brexit, compared to 86 per cent before the 2016 referendum. The remainder are either undecided or looking for unemployment outside the UK.
The chief executive of CFA UK, Will Goodhart, said: “We must do more to minimise this talent loss, or risk affecting the high calibre of our profession.”
He added: “Brexit continues to impact investment professionals’ view of the UK’s ability to compete with other financial centres, and a relatively high proportion of EU nationals in particular are still intending to leave the UK this year.”
(The author is our foreign correspondent based in the UK. He can be reached at andyjalil@aol.com)
Oman Observer is now on the WhatsApp channel. Click here
