More than a quarter of 222 UK financial services firms monitored by accounting group EY have announced that they are moving some staff or part of their operations out of the UK, or that they are reviewing their domicile as a result of Brexit.
In its latest EY Brexit Tracker the group notes that although firms voicing such intentions remain in the minority, the figures represent an uptick of some 50% from four months ago, when 39 (18%) of companies monitored had publicly voiced their intention to make staff or operational changes.
Of the 47 investment banks monitored, 21 (45%) say they are actively moving some staff or part of their operations out of the UK, or that they are reviewing their domicile as a result of Brexit. Eight major investment banks have publicly spoken in the last two weeks to give more detail on their contingency plans.
Ten of the 47 investment banks (21%) have changed their public stance on staffing and operations since the beginning of the year and are now stating that some roles or operations will be moved. Almost a third (15 of the 47) of investment banks have not made a public pronouncement on Brexit.
Ten out of the 37 companies tracked in the insurance sector (27%) and 12 out of 52 asset management firms monitored (23%) have publicly announced their intentions to move some of their operations.
However, 75 of the 222 firms (34%) monitored by the Tracker haven’t made any public pronouncement on Brexit.
Commenting on the Brexit Tracker findings, Omar Ali, UK financial services leader, EY, said: “The number of financial institutions who are publicly committing to concrete action in response to Brexit has increased, but it’s still a minority and is driven by the tight timetable rather than politics. The more complex the organisation, the longer it is going to take to create workable contingency options, and so investment banks in particular are putting their plans on record.
“Notably though, the majority of firms are maintaining their commitment to the UK, and still talking about moving only the resources necessary to maintain a smooth service for their clients. The variety of locations firms are selecting only confirms the fact that the UK’s financial ecosystem is unique and very hard to replicate in other European jurisdictions.”
No mass exodus
Alex Howard-Keyes, investment banking partner at human capital consultancy Alderbrooke, commented on the latest EY data: “It is now clear some investment bankers will move to Europe in time. Frankfurt appears to be the preferred location, although Dublin is also in contention.
“While heavy handed attempts from the Élysée to lure bankers to Paris have yet yielded results, the French election could make Paris an attractive option, especially with Macron’s promise to ease labour laws. That said, there have been many French presidents in the past who have failed to deliver such reforms.
“Any relocation of bankers will be gradual and the scale of this migration will depend on the agreement reached by the UK EU. In all likelihood, London will remain the pre-eminent financial centre in Europe for the foreseeable future.”
Haydn Lightfoot, senior director at Synechron Business Consulting, said:
“To see over a quarter of financial services firms making clear their intention to move either jobs or activity from London to another city in Europe is not a surprise. Banks and other financial services companies like certainty and there is currently no clarity on the type of access the UK will have to the Single Market after Brexit, something which will be key to many of these firms’ business models.
“Financial passporting is a crucial part of how banks in particular operate across Europe and for nearly half of those tracked to have announced plans to move either jobs or operations to Europe is expected, as many are such complex organisations that plans and processes need to be put in place now. Waiting until it is known what the Brexit deal looks like will be too late.”
“We have shown previously that it could cost on average £50,000 (US$64,700/€59,400) per role to relocate from London to another European financial centre, when taking into consideration estimates on relocation packages, hiring and redundancy, equipping a new office plus other costs. For an investment bank moving say 4,000 of its workforce to Frankfurt this would translate to estimated one-off costs of approx. £200m. Banks are likely therefore to only be moving staff where and when it is deemed absolutely necessary.”
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