In August 2017, S&P Global Market Intelligence published an analysis of where banks will set up their European hubs. Germany, namely Frankfurt and Berlin, came first with 13 financial institutions. Dublin came a close second attracting 12 banks, insurers or asset managers. Luxembourg, France, the Netherlands and Belgium will also take a share. A bit of a missed opportunity to build a significant financial centre on the European Continent. In fairness, on a global level, Continental European cities trail way behind Asian and American financial centres.

The problem for the UK is of a different nature. I cannot believe that even the most committed Brexiteers would dare to sacrifice the City on the altar of “independence”. If the UK were to leave the single markets for goods and services for good, it would be quite disastrous. Banks and their lobbyists work hard on negotiating deals favourable for the City. One must not forget that the City was never a “Leave” protagonist.

It seems for now our clients are still predominantly in “exploration mode”. What are the legal requirements? What is the tax regime? How are the regulatory requirements including AML? How is the access to the job market? How much technical infrastructure do we need? Is there a suitable partner? Few have committed to relocate large teams or shift entire businesses. At least for now.  

But the clock is definitely ticking. The longer uncertainty prevails, the more likely it is that institutions will lose patience and accelerate and upscale their relocation plans. And once the decision is taken to move, it will be hard to reverse it. On top of that, the ECB, will keep a very close eye on firms establishing new subsidiaries on the continent. There will be no room for strawmen. There are varying analyses circulating how much capital would flow to the continent. Nobody knows for sure but it will be in the tens of billions. And of course, the move will trigger a flood of adjustments from ICAAP and ILAA to RRPs and GDPR.

It is hoped that the City’s future is high on the agenda of those involved in Brexit negotiations. Simply watching the clock tick down is not an option. No-one wants to contemplate thousands of jobs leaving London and the impact this could have on the City and the UK economy as a whole.