U.S. bankers are currently scouring European cities in their search for possible bases to run their operations from. Yet, they have so far failed to find a replacement for London as New York City’s counterpart.
Bankers in London have been taking into calculation a Brexit months before the vote. But the actual vote on Thursday took everyone by surprise. Bank managers don’t know either when and how the country will formally leave the European Union, but they feel are pressed by time.
Analysts believe that Wall Street bankers now have two options: either wait and risk running out of time or take Brexit as a reality and rush things up. Plus, if they plan to move to Europe, there is no location that favors their business in a particular way as London does. So, experts expect a highly fragmented financial industry after the Brexit vote.
Additionally, London has some clear advantages other European cities don’t have. It is a mainly English speaking piece of land. It is also spacious and cosmopolite enough to host thousands of bank managers and their families. It has also an elite system of schools.
Bankers now eye Dublin, Paris, Amsterdam, and Frankfurt to relocate. But so far no city has all of London’s qualities.
Even though Britain needs up to 2 years to formally exit the E.U., Wall Street bankers feel they’re in a race against time. JPMorgan Chase & Co has already announced that it plans to relocate $16,000 staffers from London.
Goldman Sachs said it has been preparing for the worst for “many months.” But it has recently built a new HQ in London and has no idea what to do with the remaining space. A spokesperson for the bank said that the business or business location won’t be affected by the British Leave for now.
Morgan Stanley said it wouldn’t relocate all its staffers before 2018 since it is now waiting for the real outcome of the Brexit, which will be hopefully clearer in two years’ time.
In the meantime, other exits may follow as Euroskeptics and nationalists across Europe may also demand similar referendums. Or, countries may just demand to abandon the euro and return to their old currencies.
That would have a tremendous impact on U.S. banks that exchange trillions of euros on Britain’s exchanges. And bankers also expect added pressure from the European Central Bank to relocate in eurozone and leave London soon.
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