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Bank CEOs in no rush to move staff from UK after Brexit vote

Wednesday, August 3, 2016 - 20:35
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Bank chiefs from HSBC Holdings Plc's Stuart Gulliver to Credit Suisse Group SA's Tidjane Thiam say they aren't ready to quit the UK just yet.

[LONDON] Bank chiefs from HSBC Holdings Plc's Stuart Gulliver to Credit Suisse Group SA's Tidjane Thiam say they aren't ready to quit the UK just yet.

The key issue will be whether Britain retains its right to sell financial services freely across the European Union from London - known as passporting - and that's unlikely to be settled until 2018 or later. While many bank executives warned of big moves before the Brexit vote, they have since changed to a more patient tone.

"There isn't a burning need for us to make a decision ahead of seeing how the UK government negotiates," Mr Gulliver said in an interview Wednesday.

"We've got plenty of time to see how that pans out."

UK Prime Minister Theresa May has said she will fight for the City of London to retain its passporting rights, but she faces an uphill battle trying to win concessions from EU partners still smarting from the outcome of the June 23 vote.

Before the referendum, Mr Gulliver said he would move 1,000 staff to France after Brexit, while JPMorgan Chase & Co's CEO Jamie Dimon said as many as 4,000 employees would be relocated to the continent. Finance leaders haven't added to those numbers in recent comments.

"We are very pleased to be in the UK, we've been there a very long" time, BNP Paribas SA's chief financial officer Lars Machenil said in a July 28 Bloomberg Television interview with Caroline Connan. "We stay there to serve our customers."

London's financial lobby group warned Wednesday that the city's status as the world's pre-eminent financial hub could be undermined if the U.K. loses its passporting rights. Being able to tap the EU's single market "under broadly similar conditions" is "of utmost importance," TheCityUK said in a report.

Standard Chartered Plc CEO Bill Winters said the new UK government "recognize clearly what's at stake" and are in the banks' corner. UBS Group AG's Sergio Ermotti said he remained hopeful that Britain would maintain those rights.

"There are reasonably good arguments for why the EU should accommodate some of the UK's requests in terms of being able to access the single market, retaining something like the passporting rights," Mr Winters said. "You can imagine scenarios that are in the real realm of possibility where the EU would agree on arrangements that wouldn't impact the City at all. And that would be great."

Should that not be the case, banks including UBS, Deutsche Bank AG and Barclays Plc said they were prepared to shift some of their London operations and jobs to other EU cities such as Dublin, Paris or Frankfurt.

"We do not currently see a need in our options to shift jobs or significant operations elsewhere," Barclays CEO Jes Staley said last week. "If we do require a buildup of capability in another EU jurisdiction as part of our plans, then we can do so and we will."

Deutsche Bank's CEO John Cryan said firms which have main hubs already in the EU had a "competitive advantage" over those which have London as their European headquarters. His firm expects the UK to lose passporting rights, Business Insider reported on July 19, citing an internal document.

"We end up slightly bizarrely by having something of a competitive advantage, which we didn't want to create and is a bit inadvertent, but we came out of this relatively strongly," Mr Cryan said on a call with analysts last week.

Lloyds Banking Group Plc became the first big lender to announce job losses after Brexit, saying it would cut a further 3,000 employees.

"Absolutely these are tough decisions that we have to take," CEO Antonio Horta-Osorio said on a call with reporters. While low interest rates prior to the EU referendum were "already a factor that drove our previous plan, now, of course, interest rates will continue to be lower for longer."

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