With many European lenders in the UK mulling over their Brexit strategy and consequent relocation options, the choice for US banks may be even more linear. US bank staff in the UK appear to be fully at the mercy of the regulators, and could be forced out of the country. JPMorgan’s Chief Executive Jamie Dimon echoed this reality as he touched on the bank’s 16,000 personnel in the country this week.
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The potential conflict between US banks and EU authorities will effectively decide the fate of thousands of workers in the UK, not just at JPMorgan but for other US lenders. Mr. Dimon warned of these headwinds at the Paris Europlace conference this week. “If the EU determines over time that they want to move a lot more jobs out of London into the EU, they can simply dictate that.”
Jamie Dimon, JPMorgan Chief Executive
Reuters
This sentiment has been widely shared amongst many lenders in the country, which collectively see thousands of jobs leaving London. While a move to within the bloc may be inevitable, the rapid displacement of thousands of jobs out of the UK could have negative consequences for London itself, according to an FT report.
A tidal wave of banks have already come forward this month – the timing of the flurry of updates from lenders regarding their Brexit plans have to do with the Bank of England. The central bank had previously called for a mid-July deadline for UK-based banks to provide the regulator with detailed plans about their Brexit strategies. Most European lenders have opted for either Frankfurt or Dublin as their new EU hub and base of operation, though it is unknown how many staff this actually entails.
EU regulators hold the cards
For JPMorgan’s part, and that of other US lenders, much of their staff is fully dedicated to serving EU clients – this makes any move to the bloc even more of a forgone conclusion, though US banks’ Leverage in this area appears to be nonexistent. Ultimately, the EU has full power to obligate thousands of personnel to relocate to the EU, which will likely trigger the materialization of more concrete plans in the near future.
JPMorgan has already outlined a plan to move segments of its operations into a trifecta of cities, including Dublin, Frankfurt, and Luxembourg. Other US lenders have also charted a similar course, including Morgan Stanley and others. Still, the logistics of tens of thousands of workers moving will not come without consequence, with London bearing the biggest brunt of this exodus.
US banks will await clarity from the EU as to their eventual strategy, though many seem to be embracing the idea of wholesale moves into the bloc as passporting rights are eventually suspended.
