London bankers face
Brexit choice: lobby or leave
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[July 02, 2016]
By Sinead Cruise and Lawrence White
LONDON (Reuters) - A week after Britons
voted themselves out of the European Union, many London-based bankers
and their employers face two options if they are to secure their
futures: lobby or leave.
Some investment banks, anxious not to stir speculation of an exodus
from the historic City of London and its modern counterpart at
Canary Wharf, have given out "business as usual" messages since last
week's shock referendum result.
But beyond the soothing words the wider industry is hastily
organizing a lobbying effort in the hope London can keep selling
financial services across Europe, a right to which it has become
accustomed but may lapse when Britain finally exits the 28-nation
The alternative for banks and bankers, growing increasingly insecure
in an information vacuum that has developed since the June 23 vote,
is to get out. Headhunters report a level of anxious calls they
haven't seen since the 2008 global crisis, with bankers asking about
prospects in rival financial centers that remain in the EU, or those
in Asia and the United States.
Banks and other financial firms have rallied together, forming a
group to devise a strategy for protecting the turf of an industry
that is Britain's biggest exporter and accounts for more than 10
percent of its tax revenues.
Even Britain's biggest lenders are relying on the group - led by
Shriti Vadera, chairwoman of the UK arm of Spain's Banco Santander
who is also a former business minister - for guidance in such
"We are looking to them to have an intelligent response," Barclays
chairman John McFarlane told an industry event on Thursday. "We
neither know the shape or direction of things to come. It's far from
certain what we might be able to secure from discussions with the
With the British government in disarray, European politicians are
threatening to clip the wings of the London financial center that is
home to more than 250 foreign banks and more than three-quarters of
the EU's capital markets activity.
French President Francois Hollande has backed calls for London, the
world's biggest currency trading center, to lose its right to clear
deals denominated in euros. Likewise, the right of banks based in
Britain to operate across the EU under the bloc's financial
"passporting" arrangement could also go if it loses access to the
single European market.
Britain has yet even to say when it will formally inform the EU of
its intention to leave, a move that will start two years of divorce
negotiations. Prime Minister David Cameron has said he will resign,
but left the formal exit notification to his successor who is
unlikely to be installed until September.
Leading "Leave" campaigners have also yet to say precisely what they
want, beyond stating their desire to control the right of EU
citizens to work in Britain - something Brussels says is impossible
if the country wants to stay in the single market.
So while the financial sector is poised to lobby, it has little idea
of whom it must present its case to on the British side.
"We are ready to talk, but we don't know who we should be talking
to," said a senior banking industry source involved in the
discussions. "No-one has defined 'leave', so we don't know what it
is that we're dealing with ... September feels a very long way off."
Bankers said their message to European officials is that keeping
Britain in the single market would be better for economic growth and
jobs across the bloc. Fights over where banks do their business and
forcing them into major overhauls of their operations would damage
the broader financial system, they argue.
Some dislike being told what to do, such as HSBC Chairman Douglas
Flint, whose bank decided only earlier this year against moving its
headquarters from London. "Politicians can't dictate where things
are done," he told Thursday's TheCityUK annual conference.
Sometimes the relationships needed for lobbying are only now being
established. The benefits of passporting have meant that U.S.
investment banks in particular have rarely discussed broad market
access issues with European officials, meaning they are starting
their charm offensive from scratch.
WHERE TO GO NEXT
Rumors are swirling that banks and other financial firms, which
together employ more than 2 million people across Britain, will move
staff to the likes of Frankfurt, Paris or Dublin.
Investment banks Goldman Sachs and Morgan Stanley have moved quickly
to quell speculation they are about to do so.
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The Canary Wharf financial district is seen in east London November
12, 2014. REUTERS/Suzanne Plunkett
But some bankers, especially those involved in mergers and acquisitions, fear a
repeat of the heavy job cuts, tumbling salaries and sky-high stress levels
during the 2008-09 crisis.
"People in UK M&A know they aren't getting paid bonuses this year ... But that's
just one of their troubles," said THS Partners Portfolio Manager Xavier Van
Hove. "They know banks are going to have to fire people so they are very
conscious of that. And the Europeans among them are wondering where they go
Stephane Rambosson, managing partner for the UK and head of financial services
at headhunter DHR International, said he had taken more than a dozen calls from
senior London-based investment, M&A and equity capital markets bankers in the
The questions they asked were all the same: how safe is my job? Where will I
need to move my family?
"The last time it happened was during the crisis, when people were equally
concerned about job prospects and the direction of their careers," Rambosson
said. "People know this is something they have to plan for but there's little
for them to go on right now."
Some in the industry are contemplating leaving Europe altogether.
"We are getting more resumes every day from London," said Matthew Hoyle, who
runs a financial services headhunting firm in Hong Kong. "I don't think many
people in London are very keen to move to Paris, Frankfurt ... English is a
problem there and it's really very different from London."
Uday Singh, a New York-based partner with consulting firm A.T. Kearney, said he
believes London-based financial executives will give serious thought to moving
to the United States.
"The U.S. actually has a pretty permissive immigration regime where qualified
company executives are concerned. It's a matter of a couple of months of visa
processing and the job can certainly be done from here," he said.
Leaders of British banking remain hopeful that the next government will
negotiate continued access to the single market. For that reason, they say they
are not yet ready to spend billions beefing up or launching subsidiaries in the
"We are all working on multiple scenarios. For many firms, it would be premature
to activate all that pre-referendum planning," said Clare Woodman, global chief
operating officer for institutional securities at Morgan Stanley.
But others worry whether the industry - still tainted by the bank failures of
2008-09, 'fat cat' bonuses and a magnet for public scorn - can secure the
backing it needs.
"We won't gain much from trying to remind the electorate how important we are to
them, we need to get other advocates for our industry," David Sproul, Chief
Executive of Deloitte told the TheCityUK conference.
Meanwhile, London's rivals are moving aggressively to capitalize on its limbo by
"Finance ministries are getting in touch. I won't say who we're talking to but,
well, French-speaking, German-speaking, Spanish-speaking, Dutch-speaking,
English-speaking countries are all interested," the senior banking source said.
"It's very much on the lines of 'we are sorry you got divorced, would you like
to go on a date?"
(Additional reporting by Dan Freed in New York, Denny Thomas and Sumeet
Chatterjee in Hong Kong, Andrew MacAskill, Carolyn Cohn, Huw Jones in London;
Editing by Rachel Armstrong and David Stamp)
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