US banks including Citigroup, Bank of America and Morgan Stanley are preparing to move their European operations out of the UK should the country leave the EU, according to the Financial Times.
Over 250 foreign banks currently run operations from the UK. According to lobby group TheCityUK, l this generated a trade surplus of $71 billion last year, with about a third of this coming from trade with the EU. Currently, financial institutions with a base in the UK enjoy “passported” access to the wider Eurozone market, but widespread euro-scepticism across Britain has raised fears that the country could soon become isolated, making it far less attractive to international banks. Although many executives are thought to be concerned about upsetting regulators by talking openly about the plans, one insider told the FT: “I don’t think people are making enough of it – a lot of passported activities that cannot take place in London will not exist here any more.”
Although it has been presumed that Paris or Frankfurt would be the most likely choice for relocation, Dublin is also aggressively courting financial institutions. Many speculate that the combination of low corporate tax rates, similar legal system and English speaking population could trump other Eurozone candidates. Citigroup, Bank of America and JPMorgan already have staff and banking licences in Ireland that would allow them to conduct passported activities across the EU if required, whilst Citigroup has established sizeable investor, banking and markets, and trade and treasury services in the country.
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