Brexit worries see financial services move £800bn

Heightened uncertainty about how the UK will manage Brexit has driven financial services companies to move almost £800bn of assets to Europe, with Dublin proving a popular location, according to research by EY

At the end of November, 36% (80 out of 222) of the companies monitored in EY’s Financial Services Brexit Tracker had publicly confirmed, or stated their intentions, to move some of their operations and/or staff from the UK to Europe - increasing from 31% (68/222) over the previous twelve months.

For universal and investment banks, wealth and asset managers and the insurance sector, that number jumped to 48% of firms (68 out of 143).

Over half (56% or 27 out of 48) of the universal banks, investment banks and brokerages said they are considering moving or have confirmed that they are moving some of their operations and staff. This compares to 44% (25 out of 57) of wealth and asset managers and 42% (16 out of 38) of insurers and insurance brokers.

In aggregate, 30% (67 out of 222) of firms monitored in the survey have now confirmed at least one location in Europe to where they are moving, considering moving, or adding staff and operations, up from 25% the previous quarter.

According to EY’s analysis, just over 7,000 jobs could relocate from London to Europe in the near future, fewer than previously predicted due to some companies fine tuning their projections and revising down their estimates, as well as deciding to hire certain roles locally on the continent.

The analysis also shows Dublin attracted six and Paris attracted five more financial services companies from September 2018 to the end of November 2018.

Of the companies monitored, 27 have confirmed they are moving or adding some staff and/or operations to Dublin, up from 21 last quarter. Paris has gained in popularity, with 15 companies confirming they are moving or adding some staff and/or operations to the French capital, up from 10 last quarter. Two more companies confirmed plans to move or add some staff and/or operations to both Frankfurt and Luxembourg, with the numbers rising from 15 to 17 and 14 to 16 in the last quarter respectively.

Since the EU referendum, 20 companies have announced a transfer of assets out of London to Europe. Of those which have stated they intend to transfer assets out of the UK, eight are investment banks, six are insurance providers, and five are wealth and asset managers.

Not all firms have publicly declared the value of the assets being transferred, but out of those that have given a value of the assets which could move, EY’s analysis suggests a conservative estimate of around £800bn so far.

Omar Ali, UK financial services leader at EY, said: ‘In anticipation of the Parliamentary vote in January, the City will be watching closely to see if the proposed Brexit deal will be accepted or whether it’s back to the drawing board for the government.

‘As things stand, and per regulatory expectations, financial services firms have no choice but to continue preparing on the basis of a “no deal” scenario.

‘The City is further ahead in implementing its Brexit contingency plans than many other sectors and our numbers only reflect the moves that have been announced publicly. We know that behind the scenes firms are continuing to plan for a “no deal” scenario.

‘The closer we get to 29 March without a deal, the more assets will be transferred and headcount hired locally or relocated. Inevitably, the contingency plans are for Day One only, and in the event of “no deal” will represent the tip of the iceberg as longer-term plans will be more strategic and extensive than those publicly announced to date.’

Report by Pat Sweet

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