Senior executives from large U.K. banks are experiencing a growing uncertainty over whether the British government will establish a transitional agreement. Many of those large banks have already cautioned the American government that Brexit uncertainty may drive thousands of jobs out of London.
Banks May Take Their Jobs Out of London Within Months
A U.S. banking consortium which includes HSBC, Goldman Sachs and JPMorgan Chase already cautioned U.S. Commerce Secretary Wilbur Ross that they may soon be forced to move jobs out of London to new locations abroad.
The top banking execs say that the U.K. government’s lack of clarity regarding whether or not a transition deal will be in place has left them little choice. The uncertainty left behind with respect to the way Brexit will impact the banking industry is driving this financial giants elsewhere.
The consortium said that there was inadequate guidance provided for navigating financial regulations changes once the United Kingdom leaves the European Union.
The banks also underscored their concerns after having received no clear image of what may be involved in the final Brexit deal. As a result, they informed U.S. Commerce Secretary Ross that they intend to head large components of their operations to other cities in the E.U. or to the United States.
Banks are Starting to Feel a Sense of Urgency
Even before the E.U. held its vote, various forms of potential contingency plans had already been considered and debated. However, Brexit approaches, the degree of urgency associated with these discussions has been rapidly rising.
Corporation of London policy chair, Catherine McGuinness, stated that “the fear of a crash-out is rising.” The Corporation of London is the local government for the U.K.’s capital city. She also went on to explain that the remainder of the year could be defining for a number of banks. It will likely be within the next three months that the majority of the large banks decide what they will be doing with their London operations.
“We really shouldn’t understate or underestimate what a critical moment we’re at for this sector,” said McGuinness. The longer banks must operate without guidance or reassurance regarding a transitional agreement, the greater the odds that those financial institutions will continue taking their operations elsewhere.