As Britain prepares to leave the European Union, Bank of America has announced that it will be shifting its EU base from London to Dublin.
Bank of America is the first of the Wall Street lenders to choose Dublin for base.
Having voted for Brexit, UK is currently negotiating with the EU to draw a roadmap for its exit and the future. Critical steps are being drawn towards shared responsibilities. The two parties are deliberating on issues like migration, trade and financial responsibilities. UK is set leave EU on 29th April 2019.
There has been concern expressed in the UK about how this move will affect the region’s economy. UK’s Chancellor of the Exchequer Philip Hammond admitted in an interview to BBC that businesses were reluctant to make investments in Britain. Experts have also voiced concern over food security in Britain.
However, economy so far has remained stable. The pound has weakened but UK stockmarkets have risen since last year. The Gross domestic product (GDP) increased by 0.7%, up from 0.6%.
Post Brexit, many companies have begun preparations to set up new bases elsewhere in Europe. Frankfurt and Dublin have emerged as clear frontrunners. US investment bank Morgan Stanley has chosen Frankfurt. Companies like Daiwa, Sumitomo Mitsui and Nomura of Japan have also expanded their Frankfurt offices.
Barclays is mulling a move to Dublin as well. The Irish government has been bullish in attracting banks to the country and has welcomed the recent developments.
Bank of America currently employs 6,500 people in London. It isn’t yet clear if those numbers will be scaled back soon. Details have also not been provided regarding hiring new hands in Dublin. Brian Moynihan, Bank of America’s chairman and CEO, said, “Dublin is the home of more of our employees than any other European city outside of the UK. We already have a fully licensed and operational Irish-domiciled bank which, combined with Ireland’s strong commitment to business and economic growth, makes Dublin the natural location to consolidate our legal entities as we transition.”
Paris has also received attracted interest from such institutions.
Our assessment is that London might be in danger of losing its primal status as the financial hub in Europe. There is uncertainty about the role it might play globally after 2019. Financial companies are looking for locations that will let them serve their clients across Europe without incurring any problems. London can no longer guarantee that.