According to media reports, Credit Suisse is planning to relocate 250 investment banker jobs from London to the continent. This is the “first phase” of its Brexit plan. A number of financial institutions have already announced their intention to shift their EU headquarters out of the island.
If Britain does not manage to acquire a favourable deal, it would be a significant blow to the capital city’s economy.
In a referendum on June 23rd, 2016, Britain narrowly voted to leave the European Union stunning Europe and the world in general. The EU employs a set of policies for its 28-member states that aims to ensure the free movement of people, goods and other services. Britain is deeply intertwined with the workings of EU especially in regard to trade. Leaders of member nations have expressed their dismay over Britain leaving the body over the past year. German Chancellor Angela Merkel and Dutch Prime Minister Mark Rutte are among those who have been vocal about their apprehension to the unfolding events.
A report in Financial Times has revealed that foreign banks have contributed £17 billion to the UK’s public finances in the latest financial year. This has raised concerns that as international banks continue to shift their bases from London, an important source of revenue for the London economy would be lost.
Top global organizations like Morgan Stanley, Citigroup Inc., Standard Chartered Plc and Nomura Holdings Inc. have already announced they will be shifting their EU base outside of London. The country and city that has emerged the top pick for these companies has been Frankfurt in Germany. Additionally, it has been reported that Goldman Sachs Group Inc. and UBS Group AG are also similarly considering moving to Frankfurt.
The UK is officially set to leave in March 2019. The EU has offered a transition period until December 2020 after this.
Credit Suisse Group is a 160 year old multinational financial services company with headquarters in Zurich. As of 2015, the company held over $800 billion in assets. Credit Suisse deals primarily in wealth management, investment banking, and private banking. It is one of the largest investment banks in London.
On the 26th of February, it was reported that the Swiss Group Credit Suisse intends to transfer approximately 250 jobs out of Britain as part of their Brexit plan. The bank currently has 5,500 employees in London. Employees who will be asked to relocate include corporate finance staff as well as investment bankers in areas such as trading and acquisitions.
According to Bloomberg, these jobs will most likely be moved to either Frankfurt or Madrid, as the company turned down a Paris offer after talks with French officials.
A number of investment banks have recently publicized their plans for Brexit. Only last week, Deutsche Bank announced its intention to relocate its primary EU operations to Frankfurt. “We have today begun to engage with clients regarding the global booking hub,” a spokesperson for the bank said. “We believe it is prudent to begin this process now, given less than 14 months remain until the U.K. is scheduled to leave the European Union.”
However, Credit Suisse has yet to declare its plans to the public. “Credit Suisse continues to investigate its options as to the best way to maintain access to EU clients and markets by leveraging existing infrastructure in the event of a Hard Brexit,” a Credit Suisse spokesperson told reporters.
Last October, the Bank of England released a report estimating up to 75,000 jobs leaving the island in case of a hard exit.
Our assessment is that in upcoming months, the United Kingdom will continue to see financial institutes such as Credit Suisse announce Brexit contingency plans. The anticipated lack of access to EU’s single market has already resulted in a number of corporations relocating their operations. A soft Brexit with a longer transition period would help cushion the change. As stated previously, we believe that Brexit will negatively impact the British economy.