£711bn of assets tipped to leave London for Frankfurt due to Brexit
London is expected to lose a mammoth 800 billion euro (£711 billion) of assets as lenders shift operations to Frankfurt in preparation for Brexit.
Frankfurt Main Finance, the German city’s lobby group, said 30 out of 37 financial institutions which have applied to the European Central Bank for new licences, or to extend existing ones, have chosen Frankfurt for their European headquarters.
“All in all, we expect a transfer of 750 billion-800 billion euro in assets from London to Frankfurt, the majority of which will be transferred in the first quarter of 2019,” Hubertus Vath, managing director of Frankfurt Main Finance, said.
Mr Vath also said he expects further assets to be transferred to Frankfurt from London over time as some banks will first move only what is necessary.
“As it currently stands, banks face the decision of either relocating only what is absolutely necessary or preparing for the relocation of their entire business.
“As long as uncertainty persists, most institutions are likely to prefer the minimum solution. In any case, it is clear that considerable second-round effects will follow.”
He still expects up to 10,000 jobs will move to Frankfurt but anticipates that will take eight years, as opposed to five, for jobs to relocate.
“We stand by the potential of up to 10,000 jobs moving to Frankfurt which we estimated on day one after the Brexit referendum,” he said.
“However, there are signs of a second transition phase, which is expected to last until the end of 2022, and thus a further delay.”
Several London-based banks have indicated they will shift jobs to Frankfurt or other financial hubs in Paris and Dublin, which are also vying to take some of London’s business.
JP Morgan previously said at least 4,000 of its 16,000 UK jobs could be moved to the EU; HSBC has said it is on course to move up to 1,000 jobs to France; and Goldman Sachs – which employs 6,500 UK staff – is set to at least double its Frankfurt workforce to 400.
Citi has confirmed around 150-200 staff will be affected out of 6,000 in London and 14,000 in continental Europe, while Barclays also expects a “small number” of roles – around 150 – to move from London to Europe, with most heading to Dublin.
Frankfurt Main Finance said financial institutions were prompted to relocate business to the German city due to the “willingness signalled by German politicians” to loosen labour laws.
“Politicians have listened, promised and delivered,” Mr Vath said. “This is a clear sign that the banks’ relocation to Germany is desired. It is a sign that is seen and appreciated.”
A disorderly Brexit that leaves Britain with no deal nor a transition period could see banks lose passporting rights that allow direct access to clients in the EU.
MPs are set to vote on Prime Minister Theresa May’s EU withdrawal bill on December 11 and if it is not approved it could see Britain crash out of the bloc with no trade deal and no transition period.