Bank of America Merrill Lynch (BofA Merrill) has indicated that its European head office will remain in London post-Brexit, as it starts considering whether to renew the lease on its current premises near St Paul’s Cathedral when it expires in 2020 or move to an alternative address.
According to the Daily Telegraph, the second-biggest US bank has hired property agent CBRE to identify suitable alternative sites in London, easing concerns that it might transfer many jobs to a location outside the UK, such as Frankfurt, Paris or Dublin.
At the same time Valérie Pécresse, president of the regional council of Ile-de-France, heads a team from Paris visiting London this week as the French capital steps up a campaign to lure away up to 20,000 workers from the UK finance industry.
A newly-released analysis from Synechron suggests that it would cost banks and other financial services companies an average of £50,000 (€58,000/US$62,000) per employee to relocate parts of their UK workforce to another European city in the wake of Brexit. The IT and management consultancy calculated the figure using estimated relocation, hiring and redundancy costs, new building and rent costs plus other infrastructure and some contingency costs.
“Following the UK’s decision to leave the European Union [EU], many banks and financial services firms are having to consider where best to locate certain parts of their workforce,” said Tim Cuddeford, of Synechron’s business consulting practice.
“Financial ‘passporting’ is vital to the work many banks undertake across Europe and they will have to think carefully about which city within the EU their interests and their clients’ interests will be best served.
“Our calculations show that it could cost these firms on average £50,000 per employee to relocate parts of their workforce out of the UK, perhaps to financial centres such as Amsterdam, Dublin, Paris and Frankfurt. Other cities may be just as competitive and worth considering as long as there is access to similar talent pool and infrastructure.”
Issues under review
Lloyd Wahed, managing director of data analytics network Athelstan Search, commented: “We are hearing clearly that banks are looking to relocate certain functions from Britain to the Continent. However, it is clear that the bulk of this movement will be back office, support and administrative roles.
“On the other hand, not only are the more highly skilled and strategic roles staying put, we have seen demand for data analysts in London’s investment banks increase.
“In particular, there has been an uptick in search requests for chief data officers. This has largely been in response to impending European directives like the Markets in Financial Instruments Directive (MiFID II) and the General Data Protection Regulation (GDPR), which will still affect British banks post-Brexit. Overall, the growing importance of data analytics for both compliance and strategic purposes means that banks simply can’t afford to relocate such crucial members of the organisation.”
Alex Howard-Keyes, investment banking partner at executive search firm Alderbrooke, says that UK banks’ employment strategies are changing in preparation for Article 50.
“It seems likely that some personnel will move to European destinations in time,” he reports. “We are hearing from some large US and European banks they are seriously considering relocating small operations to different destinations in Europe.
“Frankfurt appears to be the preferred location, although Dublin is also in contention. On the other hand, it’s not clear whether heavy handed marketing campaigns to lure banks to Paris have yet yielded results.
“Any future relocation will almost certainly be gradual and the scale of this migration will depend on the agreement reached by the UK and the EU. In any case, the likelihood is London will remain the pre-eminent financial centre in Europe for the foreseeable future.
“Firms must communicate any relocation strategy to employees as soon as possible. Employees themselves can also play a part. Marking yourself out as a flexible employee by putting yourself forward for roles required abroad will highlight your value.”
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