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What impact is Brexit having on US bank growth plans?

25 / 06 / 2018
Brexit took another shaky step forward last week, as prime minister Theresa May finally squeezed the EU (Withdrawal) Bill through parliament. Rebel MPs had threatened to sink the legislation, forcing the Conservative Party leader to provide assurances that her colleagues would have a meaningful say on any proposed deal. 

But the battle to get the bill through parliament is just the latest in a string of squabbles, both at the national and international level, that have plagued the Brexit process. This has understandably led to continued uncertainty for Europe, and this anxiety may be spreading further afield.  

So what impact is Brexit having on US bank growth plans in the UK and Europe? To find out, let's first examine some recent political developments. 

Trump stops trumpeting about Brexit

After the EU Referendum resulted in a win for the Leave campaign in 2016, US president Donald Trump described the vote as a "beautiful, beautiful thing". Fastforward to the beginning of this year and the billionaire former businessman hinted at a "great" trading deal between the US and the UK following Brexit. 

In an exclusive interview with Piers Morgan on ITV, Trump said: "As you know, you're somewhat restricted because of Brexit, but when that restriction is up, we're going to be your great trading partner."

However, a few months is a long time in politics, and the US president's enthusiasm for Brexit appears to be cooling. In fact, insiders claim Trump has developed a new appreciation for the EU as his presidency progresses, which means the UK may not be at the front of the queue for trade deals. 

Trump is also rumoured to be worried about the impact Brexit will have on US jobs, so how has this apparent U-turn affected big banks and their growth plans? 

Banks remain pragmatic on Brexit

On the whole, Brexit doesn't appear to be overly panicking US banks. A recent Reuters report showed the top five financial institutions across the pond have more than 1,500 job postings in the UK between them, with hiring numbers higher year on year. 

Chambers of commerce and politicians across Dublin, Frankfurt and Paris are trying to leverage Brexit fears and establish the cities as the new financial services hubs of Europe. But Reuters claimed JP Morgan, Morgan Stanley, Citigroup, Bank of America Merrill Lynch and Goldman Sachs have less than 200 out of 1,500+ vacancies posted across the three cities. 

Here is a quick rundown of what we know about US bank post-Brexit plans.  

JP Morgan

JP Morgan is widely acknowledged as the biggest bank in the US, with approximately $2.5 trillion in assets. The organisation has also been one of the most vocal about relocating jobs out of the UK if Brexit leads to significant changes in the financial environment. Chief executive Jamie Dixon has previously said the bank may move up to 4,000 of its 16,000 UK-based workforce out of the country. 

However, JP Morgan has since revised this number to between 500 and 1,000, and Reuters claims the bank has more job openings in London than its competitors. The firm had 593 vacancies posted on its website in Britain at the beginning of March, compared with just ten in Germany and 19 in Ireland. 

Bank of America (BoA)

The bank has selected Dublin as its EU base of operations, with approximately 125 jobs relocating from Britain between July and December this year. Employees working in compliance, risk, technology, credit and finance are among those that will move. 

However, Reuters recently reported that BoA may be relocating more staff to Europe than originally planned, with Paris a particular focus. One source claimed the bank had an "aggressive plan" to fill every desk at a refurbished office in the French capital that holds 700 people. 

Citigroup

Of all the banks, Citigroup has perhaps shown the most confidence in a post-Brexit Britain. The Wall Street giant launched a new innovation centre in London earlier this year, which will see 75 finance technology jobs created in the UK capital. 

That said, the bank still has growth plans in Europe, with a new broker-dealer business expected to be opened in Frankfurt by the end of this year. Citigroup has also confirmed its private bank will set up a booking centre in Luxembourg. 

Goldman Sachs 

Despite announcing a series of job moves across Europe, Goldman Sachs does not appear to have slowed down its recruitment in the UK. The bank was advertising 385 positions in Britain as of March this year, second only to JP Morgan among the major Wall Street institutions. 

Nevertheless, reports earlier this year that Goldman Sachs could move up to 1,000 staff to Frankfurt will give the City food for thought. The organisation has also unveiled plans to hire a further 250 staff in Poland in the near future.

Morgan Stanley 

Frankfurt will be the primary post-Brexit location for Morgan Stanley, with the company choosing the German city as its new EU operations base. As many as 200 roles could shift from the UK to Frankfurt as a result. 

But this may be just the tip of the iceberg, as one Reuters source claimed the bank would move 1,000 roles out of the UK, including staff in risk management, compliance, legal and trading. 

The Brexit bottom line

Ultimately, major US banks still seem to be taking a wait-and-see approach to Brexit. Organisations have threatened large-scale relocations if the UK's divorce from the EU is ugly, but it's likely most will put their plans on hold until more details of the final deal are revealed. 

Nevertheless, banks do appear to be considering their options, which includes expanding their operations in mainland Europe. While London doesn't appear to be giving up the crown as the continent's financial services hub anytime soon, Brexit is helping rival cities gain momentum. 

At Barclay Simpson, we like to keep abreast of all the latest developments in the global corporate governance recruitment markets. If you would like to discuss your hiring needs, please contact me directly on 020 7936 8926 or via email at dh@barclaysimpson.com. 

Our 2018 Market Reports combine our review of the prevailing conditions in the corporate governance recruitment market with the results of our latest employer survey.

Image credit: 8213erika via iStock
 
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