BBA Head Warns Of Banks Leaving London By Early 2017

The chief executive of the British Bankers' Association (BBA) Anthony Browne has warned that top banks could be preparing to leave the United Kingdom (UK) and shift their headquarters out of the country by early next year.

Assessing the situation in the aftermath of the Brexit, Browne said banks had been alarmed by the statements made by both UK and European politicians regarding Britain’s exit from Europe. Negotiations over terms of Britain’s exit from the EU are scheduled to start by March 2017.

There are strong indications that the British government may pursue a hard Brexit that will see the UK clamping down on free movement of labour. Currently the EU’s right of freedom of movement allows EU residents to live and work in any one of the 28 member states without restrictions.

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If Britain refuses to allow free labour movement, it is most likely to result in it losing its passporting rights and access to the EU’s single market. Passporting rights allow financial institutions headquartered in London to provide services across all 28 European markets.

Losing this right could cause the banks to relocate to other European cities which will allow them to continue this service. Some of cities being seen as candidates are Madrid, Paris, and Frankfurt.

Browne pointed out that banks working out of the UK are currently managing over £1.1 trillion of funds, basically handling most of EU’s financial operations. In a statement, Browne said

Most international banks now have project teams working out which operations they need to move to ensure they can continue serving customers, the date by which this must happen and how best to do it. Their hands are quivering over the relocate button. Man smaller banks plan to start relocations before Christmas. Bigger banks are expected to start in the first quarter of next year

The BBA is in intense talks with the government over the issue. Browne has said that he doesn’t object to other cities competing to attract financial companies away from London. He however objects to the political leadership on both sides using the exit talks to split the integrated Europe financial market into two in order to take out jobs from London and put up trade barriers.

The government has reassured UK’s financial industry that it will be a key priority during negotiations and that all efforts will be made to retain London’s status as a financial hub.

Chancellor Philip Hammond has indicated that highly skilled workers such as bankers could be exempt from migration regulations that may be implemented.

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