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Saturday, April 02, 2016

International banks set to quit the UK if we leave the EU

The banking sector is quite rightly not the most popular at the moment and certainly needs reform and stronger regulation, but the presence of international banks in the UK bring jobs and prestige, as well as contributing significantly to our balance of payments as a country.

It is therefore disturbing but not surprising that many of these banks have said that if the UK votes to come out of the European Community, they will up sticks and relocate on the continent.

The Times reports that Wall Street banks, as well as continental and Japanese investment banks, have sent reports to the Bank of England setting out how they would respond if Britain left the EU:

It is understood that the banks have outlined to officials their contingency plans that, in some cases, would see them relocate some of their business activities to other EU countries where they already have established operations.

“It looks really bad for the UK. This exercise is about showing how European business is structured and where we could move should Brexit occur,” a London-based senior financial executive at a big international bank, said.

Many of the large investment banks run their European, Middle East and African businesses from London, but most also operate subsidiaries in other EU states, including France, Germany and the Republic of Ireland.

Deutsche Bank, for example, runs its investment bank from London but maintains substantial operations in Frankfurt. Credit Suisse is one of the City’s biggest employers, but has been hiring more staff in Ireland.

In the event of Brexit, some firms are understood to have told the Bank that they could shift assets and where they book trades, potentially setting a trend for further City job losses.

The paper adds that any new job cuts would be bad news for the City, which has been hit already by a recent wave of redundancies. Credit Suisse, Deutsche Bank and Standard Chartered are among the banks to have begun laying off thousands of staff and more redundancies are expected as lenders look to automate jobs or move more staff to cheaper locations either in the UK or abroad, to countries such as Poland and India.

They also point out how the threat of a remain vote is hitting the UK Government's ability to borrow money. Bank of England figures show that foreign investors increasingly concerned about the possibility of Britain voting to leave the European Union dumped £3 billion-worth of UK government bonds in February, taking the total gilt sell-off since the start of the year to more than £9 billion.
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