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The City of London is slowly “emptied”! More than 1 trillion pounds flowed out of control to the EU due to Brexit

March 14, 2019 18:30
source: First finance

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Summary
[The City of London is slowly being "emptied"! More than 1 trillion pounds out of control of the EU due to Brexit] According to the latest report from the UK's think tank New Financial, the size of banks and financial institutions moving to the EU has exceeded expectations: in the latest statistics, from the UK to the EU There are 275 financial companies with funds, assets and personnel, with a total transfer value of 1.06 trillion pounds. (一财)

A German who worked for a German boutique investment bank, Albert, his career was slammed into the trajectory by Brexit.

Albert told the First Financial News reporter that his investment bank, after watching the Brexit process for a while, finally canceled the plan to expand the business of the British office, and all the previously promised positions were set in Germany. After all, the risk of Brexit for finance The industry is huge, and the style of German companies tends to be cautious and steady.

What Albert said is not a case. If in the United Kingdom in 2016, after the "Brexit" vote, many financial companies are still weighing whether to move out of the City of London, in 2019, such a move has become a trend, the City of London or is being Slowly "empty".

According to the latest report from the UK's think tank New Financial, the size of banks and financial institutions moving to the EU has exceeded expectations: in the latest statistics, there are 275 financial companies that transfer funds, assets and personnel from the UK to the EU. The total value of the transfer is as high as 1.06 trillion pounds.

In the interview with the First Financial Journalist, one of the problems that European financial practitioners were particularly worried about was that no one knew the direction of Brexit. Léon Cornelissen, chief economist of international pure asset management company Hob Investment Management, told the First Financial Reporter that in the face of the March 29 deadline, "it is still not clear about the Brexit event. How will it end?"

  Brexit leads to the loss of financial talent in London

"The reason why I switched to this investment bank was to see the promise of being able to work in London." Albert confided his troubles to the first financial reporter, considering his children's education and other issues, he had hoped to The family moved to London, where education resources were better, and ushered in a new phase of their careers, but everything was dissipated by Brexit.

A very real question is how often EU passport holders will shuttle between Britain and Germany in the future? Albert told the First Financial Reporter that there is no final conclusion in this regard.

Currently, from the source of hiring, the City of London is the most globally characterized industry in the UK. Statistics from the UK (ONS) show that foreigners employed in the industry account for 41% of the industry, almost three times as many foreign workers as the UK economy (14%).

The report from the new financial think tank shows that as one of the responses to Brexit, 5,000 employees will move out of the UK and work in EU countries, and this number is still growing. Oliver Wyman predicts that if the UK loses full access to the EU market, the financial industry will lose $18 billion in annual revenues and there will be a risk of losing up to 35,000 jobs.

William Wright, founder and director of the new financial think tank, said London's impact was greater than expected and would worsen.

“Uncertainty with the Brexit has begun to hamper the UK economy,” Léon Cornelissen told the First Financial reporter. “But in any case, as long as it can avoid hard Brexit, the UK economy can still Show your own resilience."

  Major banks will transfer nearly 800 billion pounds from the UK

According to data released by the European Banking Union (EBF) in September 2018, there are about 350 in the UK.currencyFinancial institutions (MFIs), with a total balance sheet of £8 trillion, are the largest banking industry in the European Union and the fourth largest banking industry in the world.

Thus, an important measure of Brexit is the scale of asset and capital transfers. The new financial think tank predicts that only major banks and investment banks will transfer nearly 800 billion pounds of assets from the UK, which is about 10% of the current UK banking assets. The total cost of each company's handling of relocation is expected to be around £3.6 billion.

The report explains that this valuation is only a small part of the company that publicly declares the transferred assets.

This transfer is an inevitable result of the “political environment” of Brexit. According to the report, “We believe that the number of companies that will be transferred will increase significantly in the next few years, because EU regulators now require companies to increase their operations in various branches, and some European cities will gradually erode the advantages of London.”

Clemens Fuest, director of the German IFO Economic Research Institute, believes that “after the Brexit, the EU is under great pressure to use regulatory measures to transfer London's business to Europe.”

  Dublin is the biggest winner

In the process of “departing from the UK” in various financial enterprises, a large number of European cities have become the foothold of the new office of financial companies.

The new financial think tank report shows that in the Brexit event, Dublin became the biggest winner: more than 100 UK asset management companies andfund companyAuthorized to apply for relocation to the Central Bank of Ireland. For example, Barclays Bank is transferring $280 billion worth of assets to Dublin.

Followed by Luxembourg: 60 relocated companies have identified Luxembourg. Companies such as Citibank, JPMorgan Chase and Northern Trust are moving their private banking and wealth management divisions from London to Luxembourg.

Behind them are Paris (41), Frankfurt (40) and Amsterdam (32), ranking 3-5th respectively.

According to the company's choice analysis, the financial company's assets and personnel transfer is not limited to a certain EU hub city, but is decentralized. This is because many companies have diversified businesses and ultimately consider developing different businesses in different cities. direction. For example, Frankfurt is home to the European Central Bank and the banking centre of the European Union. The city will be the first choice for many banks that need to move out of London. It is estimated that about 90% of companies relocated to Frankfurt are banks. Two-thirds of the companies that moved to Amsterdam were trading platforms or brokers.

Wright pointed out that as more businesses are going through local companies, companies will continue to flow from the UK to the EU, and over time, the UK's impact on European banking and financial services will gradually diminish.

(Article source: First Finance)

                (Editor: DF506)

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