You are here
A year to go before Brexit, US investment banks still bet on London
[LONDON] A year before Britain is due to leave the European Union, top US investment banks plan to hire far more people in London than anywhere else in Europe, indicating they expect the City will remain their main regional hub, at least in the short term.
When Britain voted to quit the EU in the summer of 2016, analysts predicted a mass exodus of investment banking jobs from London - historically Europe's premier financial hub - to rival centres in continental Europe.
Banks themselves warned that thousands of London-based jobs could be lost or transferred to Europe, and named or started to beef up alternative hubs in cities like Frankfurt and Dublin.
But as confusion reigns over what the trading relationship between Britain and the EU will look like after Brexit Day on March 29, 2019, top banks appear to be keeping plans for large scale recruitment in continental Europe on ice and investing in their well-established London offices instead.
As of Feb. 27, JPMorgan, Morgan Stanley, Citigroup, Bank of America Merrill Lynch and Goldman Sachs had a total 1,544 postings for jobs in Britain open on their websites, according to a review of the websites conducted by Reuters.
Total vacancies available in Dublin, Frankfurt and Paris - the three cities vying to woo business away from the city of London after Brexit - stood at less than 200 for the five banks.
The five banks, which employ around 40,000 people in Britain, declined to provide official comment on their plans.
"American banks were really quiet in 2016 and early 2017, but in the beginning of this year they are forecasting their hiring will be up (in the UK) this year compared to last year," said Darren Burns, a director at international recruitment firm Morgan McKinley.
This comes after a buoyant year for investment banking fees in 2017 and a return to market volatility in early 2018, which analysts believe could lead to much healthier revenues for the banks' trading business over the coming months.
Fees from bond and equity trading, loan syndication and mergers and acquisitions in Europe, Middle East and Africa for investment banks overall rose 19.5 percent in 2017, outperforming growth in the Americas and Asia-Pacific.
JP Morgan, Goldman Sachs, Citigroup, Morgan Stanley and BofA-Merrill Lynch took a 23.1 percent share in investment banking fees in EMEA last year, up from 21.2 percent in 2016, according to Thomson Reuters data.
Anne Murphy, head of the financial services practice at headhunter Odgers Berndtson, said U.S. investment banks were adding to their London-based workforce more actively than last year.
"It is fair to say that lots of banks are waiting as long as they can before pushing the button on any continental European relocation or hiring plans and even when that happens, in the short term the numbers involved will be in the 10s rather than the thousands," she said.
She pointed to several large office lettings and lease extensions, and a number of initiatives in the UK capital, such as Citigroup's recent decision to set up an innovation lab.
LONDON EDGE U.S. banks have said London would almost certainly remain their primary hub in Europe irrespective of Brexit, citing a broader pool of talent, a more suitable legal and regulatory framework and an Anglo-Saxon workplace culture as factors giving the British capital an edge.
However, they have also said relocation and hiring decisions were subject to change, depending on the shape of any deal between Britain and Brussels for the financial services sector.
"London will always be super important - all the banks are having to have between 6,000 and 10,000 people each here," said a senior source at one of the five US banks. "But we have a long way to go before we can drawn any long-term conclusions about how one city ranks in importance over another." JP Morgan has the most openings, with 593 vacancies posted on its careers website in Britain versus 10 in Germany and 19 in Ireland, as of Feb. 27. The bank has said it could eventually move more than 4,000 jobs out of Britain because of Brexit, but in the short term it forecasts between 500 and 1,000 moves.
Goldman Sachs is hiring 385 people in Britain and Citi 277, while Morgan Stanley and BofA Merrill Lynch are recruiting 191 and 98 people respectively.
The London hiring numbers are higher than last year at least two of the five USbanks, sources at those banks said, but pointed out that the numbers do not only involve classic investment banking roles but also IT and operations staff.
MAJOR HUB Some bankers have said they were reassured by a meeting with British Prime Minister Theresa May earlier this year, where they were told that the future of financial services was a core government priority.
The lobbying efforts by rival financial centres, such as Paris or Frankfurt, have not yet had a significant impact.
France has over the past year-and-a-half stepped up efforts to attract bankers by promising tax deductions and school places.
Out of the five banks' 191 jobs on offer in the three busiest European financial centres, 133 are in Ireland, 47 in Frankfurt, and just 11 in France.
Citigroup, which has said it would headquarter its EU trading operations in Frankfurt due to Brexit, has already started to hire for a risk analytics team in the city.
"While we will continue to operate in the UK market, we also need to develop a new solution for the EU market," Citi said in the job posting for the roles.
Bank of America Merrill Lynch is hiring in Ireland a financial accountant who will "carry out regulatory reporting to provide to the Central Bank of Ireland for the first entity, who expects to grow by the year end following Brexit".
The bank has 98 vacancies in Britain. A source familiar with its hiring plans said that "the level of replacement represents ordinary course of business".