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Britain's bankers step up opposition to 'Brexit'
[LONDON] Britain's financial industry stepped up its campaign against the country leaving the European Union on Monday after Prime Minister David Cameron named a date for the referendum on membership of the bloc.
London's banking sector is among the industries with the most to lose if Britain leaves the EU, according to many economists who say an exit could hamper its ability to operate in the single European market and lead to thousands of jobs being shifted to the euro zone.
A deal struck by Cameron to reform Britain's relationship with the bloc last week was welcomed by some executives as it ensured UK regulators would continue to be the main supervisors of the country's banks, rather than control being ceded to euro zone officials.
But that relief was tempered by London Mayor Boris Johnson's announcement on Sunday that he would back the campaign to leave the EU, a day after the referendum date was set for June 23. The mayor's decision, widely regarded as increasing the chance of a Brexit, saw sterling and British bond prices fall.
HSBC, Europe's biggest bank, has already said it could move around 1,000 jobs to France if Britain quit the EU - and on Monday it warned a Brexit could make it harder to process large payments denominated in euros and affect its transaction volumes.
Chief Executive Stuart Gulliver said some trading activity of securities like stocks that come under the EU's 'Mifid'rules, might have to be shifted to continental Europe.
HSBC Chairman Douglas Flint said every big company in Britain would be analysing the impact of a vote for Brexit. "The UK has a disproportionate number of large companies headquartered in it, thanks to its legal system and access to the single market," he said. "Every one of those would have to review what impact it would have on their particular business model."
"That period of uncertainty would be very damaging to the UK."
The policy chief for the City of London Corporation - the municipal governing body of London's financial district - said businesses had benefited from Britain's membership of the EU and there was strong opposition to Brexit among companies.
"The one thing we are saying very clearly is businesses need to speak up," Mark Boleat said. "If they've got a view they should express it - it doesn't mean they have to play a campaigning role or spend a lot of money - they need to set out their position as they see it for their business." Several major global investment banks have donated money to the campaign to keep Britain in the EU.
Britain's financial and professional services sector employs around 7 per cent of the country's workforce and produces almost 12 percent of the country's economic output according to industry group TheCityUK.
The wording over the industry's regulation was one of the final sticking points during last week's negotiations on Britain's relationship with the EU, with Cameron seeking to ensure the Bank of England would remain the main supervisor of British banks.
But lawyers said in practice the text on regulation did not come with enough safeguards to ensure that would remain the case in the long term. "The provisions for the protection of the City's rights are pretty vague, and the UK will have no clear EU rights to enforce them," said Simon Morris, a financial services partner at law firm CMS. "When the time comes for treaty negotiation, how will these provisions fare in the EU legal hierarchy and the new structure for a euro zone dominated EU?" Several bankers told Reuters they wanted Britain to stay in the European Union, but said this could nevertheless leave them facing some regulatory limbo. "The issue is, if the UK votes Yes (to leave), the uncertainty goes away. But if the UK votes No, there's even more uncertainty," said one senior London-based banker at a Wall Street bank.