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4-Traders Homepage  >  Equities  >  Tokyo  >  Sumitomo Mitsui Financial Group, Inc.    8316   JP3890350006

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Factbox - Impact on banks from Britain's vote to leave the EU

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07/26/2017 | 05:53pm CEST
FILE PHOTO: The logo of BNP Paribas bank is pictured on an office building in Nantes

Global banks have said they could move thousands of jobs out of Britain to prepare for Brexit, the country's planned exit from the European Union.

Financial services companies need a regulated subsidiary in an EU country to offer products across the bloc, which could prompt some to move jobs out of Britain if it loses access to the European single market.

Following are related stories about top banks (in alphabetical order):

ASSOCIATION OF FOREIGN BANKS IN GERMANY

The association expects 3,000 to 5,000 new jobs in Frankfurt over the next two years as a result of Brexit, its head Stefan Winter, of UBS, told German newspaper Welt am Sonntag in June. He said he expected 12 to 14 major banks to expand their Frankfurt sites significantly or build new ones.

BANK OF AMERICA CORP

Bank of America (>> Bank of America) became the first Wall Street lender to pick Dublin as its new base for its European Union operations as Britain prepares to leave the bloc.

Bank of America said in August that its businesses and results could be adversely affected and it may have to incur additional costs if Brexit limited the ability of its UK entities to conduct business in the EU.

Dublin is Bank of America's default option for a new base within the EU, but other centres are on the table and no decision has yet been made, an executive said on March 14.

BARCLAYS

Barclays is talking with Irish regulators about extending its activities in Dublin, the British bank said.

It already has a licensed bank in the Irish capital and is looking to expand that so it can act as its EU subsidiary.

Banks in Britain will start shifting some operations to continental Europe reasonably soon to avoid disrupting links with customers after Brexit, Barclays (>> Barclays) Chief Executive Jes Staley said.

He added that obtaining a licence to trade on the continent and changing financial contracts to another jurisdiction would take a year to 18 months.

Staley previously told BBC Radio that Barclays would keep the bulk of its activities in Britain after Brexit and any changes to how the bank operates would be small and manageable.

BNP PARIBAS

BNP Paribas (>> BNP Paribas) may move up to 300 London investment bank staff because of Brexit, depending how clients adapt and the French bank's efforts to win new UK business, a source said.

The company had 3,123 staff in its corporate and institutional bank in Britain at end-2016, down from 3,294 a year earlier, internal documents seen by Reuters showed.

CITIGROUP

U.S. bank Citigroup (>> Citigroup) said that it may need to create 150 new jobs in the EU to deal with the impact of Britain leaving the bloc, and confirmed it would headquarter its EU trading operations in Frankfurt.

Citi, which has a large banking unit in Dublin, had previously said it would choose Frankfurt as its hub for sales and trading in the EU and move "a couple of hundred" jobs outside of London after Brexit.

Separately, the bank's European chief said Citi would make a decision on Brexit contingency plans in the first half of the year and choose from a number of potential EU countries to relocate some investment banking business.

CREDIT AGRICOLE

Credit Agricole (>> Crédit Agricole), France's third-biggest listed bank, could relocate about 100 employees from its London hub to France out of 1,000 based there in the case of a "hard" Brexit, its chief executive said.

CREDIT SUISSE

Credit Suisse's (>> Credit Suisse Group) Chief Executive Tidjane Thiam said in September that his bank was relatively well placed to deal with Brexit and that only 15-20 percent of volumes in the investment bank would be affected.

DAIWA SECURITIES GROUP

Japan's No. 2 brokerage Daiwa Securities Group (>> Daiwa Securities Group Inc) said it will set up a subsidiary in Frankfurt, making it one of the first banks to publicly choose Germany to keep a foothold in the EU after Britain's exit.

The group has said it would still keep staff in London even after Brexit. It has 450 staff working in the EU now, mostly in the British capital.

The German city is Daiwa's favoured destination, as London-based staff can easily be transferred to its investment banking branch in Frankfurt, Chief Executive Seiji Nakata had said previously.

DEUTSCHE BANK

Deutsche Bank (>> Deutsche Bank) is beefing up its presence in Frankfurt to deal with the impact of Britain leaving the EU. Chief Executive John Cryan said the German lender expected to add new jobs in Frankfurt, where it will replicate a structure that is interchangeable with its London operations and evolve as Brexit negotiations unfold.

Deutsche Bank warned on April 26 that up to 4,000 UK jobs could be moved to Frankfurt and other EU locations - the highest potential move of any bank.

European supervisors want Deutsche Bank to prepare a fallback plan, laying out how it could shift the clearing of trades from London, one person with direct knowledge of the matter told Reuters.

EUROCLEAR

Settlement bank Euroclear is looking at the option of setting up a branch or subsidiary to provide a route between its UK and Irish markets after Brexit, the head of its UK and Irish operation said.

FRENCH BANKING FEDERATION

French banks could shift about 1,000 jobs from London to Paris to keep staff in the EU, the French Banking Federation said.

GOLDMAN SACHS

U.S. bank Goldman Sachs (>> Goldman Sachs Group) is considering moving up to 1,000 staff from London to Frankfurt because of concerns over Brexit, Germany's Handelsblatt newspaper reported in January, citing financial sources.

Goldman will begin moving hundreds of people out of London before any Brexit deal is struck as part of its contingency plans, the Wall Street company's Europe CEO said in March.

Three people familiar with the matter told Reuters in November that Goldman was considering shifting some of its assets and operations from London to Frankfurt.

HSBC

HSBC (>> HSBC Holdings) sees the chances of a hard Brexit receding after Britain's shock election result, which could result in fewer jobs moving out of London, its investment bank chief said.

Stuart Gulliver, CEO of HSBC, Europe's biggest bank, had previously said that the company would relocate staff responsible for generating around a fifth of its UK-based trading revenue, or about 1,000 people, to Paris.

Chairman Douglas Flint has told lawmakers that banks without operations elsewhere in the EU are likely to trigger migration plans immediately after EU divorce talks begin, estimating that "tens of thousands" of jobs are linked to EU "passporting" rights.

INVESTEC

Investec (>> Investec) (>> Investec Ltd) is considering converting its London bank's Dublin branch into a subsidiary to ensure it has continued access to the European single market after Britain leaves the EU, Chief Executive Stephen Koseff told British newspaper The Telegraph on May 18.

However, the Anglo-South African lender and asset manager was in no rush to secure the licence needed for such a subsidiary and would see only a small part of its business affected by Brexit, the paper quoted Koseff as saying. (http://bit.ly/2qywZzY)

JPMORGAN

JPMorgan Chase (>> JP Morgan Chase & Company), the biggest U.S. bank by assets, is planning to merge its UK-based private banking unit with its wider European wealth operation ahead of the UK's exit from the European Union, Sky News reported.

JPMorgan said in July that the bank would probably use Frankfurt as the legal domicile of its European operations after Brexit, though jobs could be moved elsewhere as well.

The U.S. bank has also agreed to buy a Dublin building with room for 1,000 staff in the first sign of a financial services company expanding significantly in Ireland since the government began a major campaign to attract businesses after Brexit.

However, the bank, which employs about 500 people in Dublin, did not say how many jobs would be created or whether any positions would be moved from the United Kingdom.

Daniel Pinto, head of investment banking at the Wall Street bank, had told Bloomberg on May 3 that it planned to move hundreds of London-based bankers to expanded offices in Dublin, Frankfurt and Luxembourg.

CEO Jamie Dimon had previously said the bank was not planning to move many jobs out of Britain in the next two years.

Before the vote, Dimon said the bank would be forced to move 4,000 of its 16,000 Britain-based staff if the country loses access to the single market.

JULIUS BAER

Julius Baer, Switzerland's third-biggest private bank is moving its European hub from Frankfurt to Luxembourg but will continue to keep its options open in London, Boris Collardi, chief executive at Julius Baer has said.

Britain's planned departure from the EU opens the door for a UK-Swiss deal covering financial services, said Collardi.

LLOYDS BANKING GROUP

Lloyds Banking Group (>> Lloyds Banking Group), Britain's largest mortgage lender and the only major British retail bank without a subsidiary in another EU country, is close to selecting Berlin as a European base to secure post-Brexit EU market access.

MORGAN STANLEY

Morgan Stanley (>> Morgan Stanley) has chosen Frankfurt to be a new base for its EU operations as Britain prepares to leave the bloc, according to a source familiar with the matter.

The bank is planning to use its Frankfurt subsidiary as the centre for its EU trading operations. "That means 200 new people will be coming to Frankfurt," the source said.

Morgan Stanley has identified many of the roles that will need to be moved from Britain after Brexit, sources involved in the processes had told Reuters.

The U.S. bank, which bases the bulk of its European staff in Britain, will have to move up to 1,000 jobs in sales and trading, risk management, legal and compliance, as well as slimming the back office in favour of locations overseas, one source told Reuters.

Morgan Stanley could initially shift 300 staff from Britain after its EU exit and is scouting for office space in Frankfurt and Dublin, Bloomberg News reported in February.

The bank plans to double the number of its bankers in Frankfurt to 400, German newspaper Welt am Sonntag reported in June.

MIZUHO

Japan's Mizuho Financial Group (>> Mizuho Financial Group, Inc.) said it would set up a subsidiary in Frankfurt, the latest Japanese bank to choose the German city as its new base in the European Union as Britain prepares to leave the bloc.

NOMURA

Nomura Holdings Inc (>> Nomura Holdings Inc) is applying for a licence to operate a new entity in Frankfurt, as Japan's largest brokerage gears up for Britain's departure from the EU .

NORTHERN TRUST

Asset management company Northern Trust (>> Northern Trust Corporation) has said it will set up an EU banking base in Luxembourg.

"Continental Europe is a strategic area of focus for Northern Trust and the creation of our EU banking presence in Luxembourg highlights our commitment to growing our business in the region," said Teresa Parker, president of Northern Trust in Europe.

Around a third of Northern Trust's institutional clients have asked it to ringfence British exposure from their broader European portfolios to protect them from Brexit-related risks.

SOCIETE GENERALE

Societe Generale (>> Société Générale) could move 400 corporate and investment banking jobs from London, with most going to Paris, Chief Executive Frederic Oudea said in July.

Oudea said the possible move of jobs after Brexit would affect 300-400 investment banking jobs out of 2,000 it has overall for that business in London.

STANDARD CHARTERED

Standard Chartered (>> Standard Chartered) is in talks with regulators about making Frankfurt its post-Brexit European base.

SUMITOMO MITSUI FINANCIAL

Sumitomo Mitsui Financial Group Inc (>> Sumitomo Mitsui Financial Group, Inc.) said its core banking unit, Sumitomo Mitsui Banking Corp (SMBC), has decided to set up a subsidiary in Frankfurt.

UBS

UBS (>> UBS Group AG) is weighing up whether to move banking jobs in London to Frankfurt, Madrid or Amsterdam to cope with Britain's planned EU departure, Chief Executive Sergio Ermotti said in an interview with CNBC in July.

The bank has estimated that it would need to "move 1,500 people" from London to the EU to retain full passporting rights, according to Chairman Axel Weber. That would be more than a quarter of its 5,500 staff in London.

The world's biggest wealth manager has also set up a bank in Frankfurt to consolidate most of its European wealth management operations, after the Brexit vote dashed London's chances of being the host city.

(Compiled by Noor Zainab Hussain and Esha Vaish in Bengaluru; Editing by David Goodman)

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