Three U.S. banks operating in London have contacted the school in Ireland about the prospect of enrolling their employees’ children. One bank this month asked for 50 slots — which go for an average of 20,000 euros, or $23,000, a pop, said project manager David Quigley.
Britain’s decision to leave the European Union has left American banks in London scrambling to implement contingency plans to relocate to the Continent so they can continue to serve clients there. Trouble is, many bankers are reluctant to leave what has long been Europe’s uncontested financial capital.
While the Brexit negotiations between the U.K. and EU only began last month, the banks are initiating plans to move thousands of jobs out of London even as they simultaneously fight to preserve the status quo as much as possible in the City of London.
On Thursday an official with TheCityUK, a trade group representing U.S. megabanks such as Citigroup, JPMorgan Chase, Morgan Stanley and Goldman Sachs, met with Prime Minister Theresa May to advocate for a business-friendly Brexit. Among the requests: a transition period that would give businesses more time to prepare.
Bankers are increasingly anxious that Brexit will end badly and force them to carry out their costly relocation plans. “We are lobbying very hard for an orderly Brexit,” said a London-based banker at an American firm.
Some 500 U.S.-based financial services firms operate in London. Switzerland is a distant second with one-tenth as many. Of the 222 largest firms with significant operations in Britain, about 27 percent are expecting to move staff out of the U.K or are reviewing their plans, according a report this month by Ernst & Young.
At least 22 investment banks have declared their intention to move some staff or operations, with Frankfurt and Dublin tied for first place, followed by Paris.
JPMorgan CEO Jamie Dimon visited Dublin and Paris this month. The bank, the biggest in the U.S. by assets, recently bought new offices on Dublin’s River Liffey.
“We do know other U.S. groups sent in their real estate teams to Dublin,” said Kieran Donoghue, head of international financial services for IDA Ireland, an Irish government agency. “It is not confined to JPMorgan.”
IDA’s clients include Bank of New York Mellon, Citi, Morgan Stanley and BlackRock, he said.
On Friday, Bank of America became the latest big U.S. bank to pick Dublin as the post-Brexit location for some of its employees. The company did not divulge the number of people who might be relocated there and said it will move some employees to other EU locations as well.
But while U.S. businesses are listening to the European cities’ sales pitches, most are more interested in staying in London, partly because moving staff is an expensive process.
Aside from the relocation cost, however, some bankers grimace when they talk about the prospect of moving to Europe and rattle off complaints about the City’s suitors: Dublin lacks good primary schools. Paris has stringent labor regulations and taxes. And Frankfurt? Too small and boring.
“One banker said to me recently, ‘There’s only one opera house in Frankfurt,’” said a London-based consultant who is working with financial companies preparing for Brexit moves.
That’s not deterring Citigroup. In an email to staff on Thursday, Citigroup’s head of Europe said the giant U.S. bank will open a second trading hub in Frankfurt. Up to 150 new positions may need to be established in the EU, but London will remain Citi’s regional headquarters, according to the email obtained by POLITICO.
Morgan Stanley is also expected to expand its presence in Frankfurt by about 200 jobs, according to press reports on Wednesday. A spokesman for the bank declined to comment.
Paris is fighting for U.S. Brexit business, too.
In addition to trumpeting President Emmanuel Macron’s proposals to ease France’s labor regulations and cut taxes, the city is trying to promote itself as a leading space for financial technology firms such as app developers for banks.
Paris Europlace, a lobbying group for the city whose members include JPMorgan and Goldman Sachs, is highlighting a massive new workspace for startups that opened in July called “Station F.” A Silicon Valley-based startup accelerator, Plug and Play, is opening an office there in September, with U.S. FinTech businesses among its clients.
Charles LaBelle, an associate director of employer engagement at INSEAD, a Fontainebleau-based business school, said students have been asking financial companies about Brexit, but “the answer is always business-as-usual.”
Recent INSEAD graduates have gone to work for Goldman Sachs, Morgan Stanley and other U.S. firms.
And in what city do they most want to work?
“London is the draw,” LaBelle said. “What we hear from students when we survey them coming in, London is always one of the top three destinations where they want to land.”
Still, U.S. companies are assuming that London’s reputation as a financial center will take a hit after Brexit.
Miles Celic, TheCityUK’s CEO, said his group is going around Europe to plead its case for a favorable Brexit with lawmakers, including one recently with the members of Germany’s legislative finance committee.
“There is absolutely no sense of complacency,” Celic said.
Author: Patrick Temple-West