Goldman moves London traders to Milan in fresh Brexit shift

GOLDMAN Sachs is shifting some of its euro swaps trading desk to Milan from London, the latest example of roles moving to the continent after Brexit.

The Wall Street giant is relocating staff as it bolsters European offices in the wake of the UK’s departure from the European Union (EU), sources said. Staff will likely move early next year, and Goldman will also be hiring staff locally, two of the sources said.

A spokesperson for Goldman declined to provide details or numbers of people being moved while the relocations are being finalised. The company currently has around 80 employees in Milan.

Some of the world’s biggest banks are under pressure to move more traders from London into EU cities such as Paris, Frankfurt and Amsterdam. The European Central Bank said in May that lenders who set up units in the euro area are still too dependent on operations outside the region, and found that about a fifth of the trading desks it reviewed “warranted targeted supervisory action”. 

That is proving to be good news for Milan and other EU financial centres.

“Due to changes in the regulatory framework, Milan is now capital-market friendly,” Russell Clarke, partner at Figtree Search in London, said.

JPMorgan Chase employs about 200 staff in Italy and is continuing to add more, an anonymous source said. It is recruiting for nine new roles including two executive directors, one working on lending advice and the other advising clients on asset management. 

Citigroup has been increasing staff numbers in Italy since 2018 due to Brexit and a broader diversification strategy. It now employs about 230 people in the country, a source said.

It is not just banks. Pan-European exchange Euronext in June opened a data center in Bergamo, about an hour from Milan, after relocating it from the town of Basildon outside of London. The operation facilitates a quarter of European equities trading, said chief executive officer Stephane Boujnah. 

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“Since our clients used it themselves, they all came back with a big ‘wow’ effect,” he said. “It makes a big difference in the perception of Italy as a European financial hub.”

To be sure, Milan remains a small player. Some 78 per cent of Europe’s fixed-income traders are still based in London, down from 85 per cent five years ago, data from Vali Analyticsm showed. Paris is in second place with around 14 per cent. 

But some high-net-worth individuals, bankers and fund managers are moving to Milan, partly lured by a favourable tax treatment. Italy allows new residents to pay a 100,000-euro (S$142,431) flat rate on profits made abroad, or pay no taxes on as much as 70 per cent of income.

“Italy has been on the cards for awhile as a lot of Italians would like to return home and take advantage of the tax break,” Jason Kennedy, chief executive officer of the recruitment firm Kennedy Group, said.

Nomura Holdings has said it wants to grow selectively in Milan, and recently hired Elena Agosti, a Goldman and JPMorgan veteran, who runs an all-woman desk from the city.

“Finally after years in trading there are enough women to find themselves on the same team,” Agosti said.

Other banks may look to move trading in European bonds and currencies into the EU following strong performances during the third quarter, said Jordan Galhardo-Burnett, principal and head of publications and insight at Expand Research.

“As we get into the medium-to-long-term there is likely to be a slow trickle” of jobs moving, he said. “Milan is well-placed.” BLOOMBERG