ummm... HSBC.... UBS?
The U.K. is getting ready to tear apart its membership of the European Union, but ultimately London's financial district should remain mostly intact, the chief executive officer of Barings told CNBC.
"I don't think you will see a mass exodus from the City (of London)," Tom Finke told CNBC at the World Economic Forum in Davos, Switzerland.
One of the main concerns regarding the British departure from the EU has been the future of the financial services industry, which is crucial for the economic performance of London.
According to Finke, there might be some jobs that will disappear in coming years but due to technological development and high living costs in big cities such as London.
"Certainly Brexit is a change for a lot of asset managers, like ourselves that have big presences in London. Fortunately for us for years we've taken a European view," Finke told CNBC.
He added that Brexit is not going to be "a big shift" thanks to the many funds they have overseas, including in Ireland, which will allow them to keep doing business as usual.
Theresa May had some rare warm words for bankers in the cold of Davos.
Speaking to Bloomberg, the U.K. prime minister offered her strongest support yet for London’s financial sector, insisting banks are of “huge value” to the economy even as executives accelerate plans to move staff to the European Union with Brexit looming.
“I value financial services in the City of London, and I want to ensure that we can keep financial services in the City of London,” May said at the World Economic Forum’s annual meeting on Thursday. “I believe that we will do just that.”
She made her case in person to bank chiefs in Davos, and her words suggest a shift in emphasis towards an industry that pays more than £60 billion in taxes each year and employs more than 1 million people. May’s government has until now focused on criticizing corporate elites and signaled banks will not be a priority in the Brexit talks.
Banks may not stay around long enough to see if she can match her words with action. During their time in the Swiss ski resort, bosses from JPMorgan, HSBC, Lloyds and UBS all gave new details of their plans to relocate jobs from London. May’s Brexit plan risks depriving them of easy access to the region’s single market.
May’s message was underscored by Chancellor of the Exchequer Philip Hammond, who told a lunch for British business leaders that “any diminution of London’s financial system would be bad” for the U.K. and EU.
For a catch up on what sometimes seemed like Brexit Day at Davos, watch our two-minute highlights.
Banks Skeptical, EU Leaders Critical
Bankers nevertheless maintained pressure on May in interviews in Davos.
Goldman Sachs Chief Executive Officer Lloyd Blankfein said New York is “already a bit of a gainer” from Brexit as the firm slows its policy of moving operations to London. While Barclays CEO Jes Staley said it’s going to be “very difficult” to recreate a financial center like London, he said banks need clarity over how long they will have to adapt to any new regime.
They also received a warning at the conference from German Finance Minister Wolfgang Schaeuble, who said in an interview that any negotiations for banks to gain access to the EU from the U.K. will be “very difficult” and would take “a lot of time.” Irish Prime Minister Enda Kenny said he’s optimistic his nation will draw investment from companies looking for a base within the EU.
Billionaire investor George Soros, the man who “broke the Bank of England” by betting against sterling in the 1990s, went as far as to say May “will not last” long in office because her Cabinet is divided and voters underestimate the pending hit to the economy.
What Europe Thinks
May this week noted, perhaps ruefully, that Europe’s leaders are “keeping their discipline” when communicating on Brexit.
They held the line in Davos too. Dutch Prime Minister Mark Rutte said the U.K. will pay a “huge price” for leaving the EU, in the form of weaker economic growth. His finance minister, Jeroen Dijsselbloem, said the U.K. underestimated the complexity of trade deals.
Bloomberg’s Nikos Chrysoloras and Jonathan Stearns reckon the EU’s public positions boil down to the following basic points:
• The bloc will negotiate with one voice and not until the U.K. files for divorce
• The EU insists that the U.K.’s terms outside won’t be preferable to its terms inside. That means no “cherry-picking” elements of the customs union and single market
• An aggressive lowering of corporate-tax rates will be seen as a provocation. Failure to reach a mutually acceptable compromise, perhaps including an exit fee, will damage any prospects of a free-trade agreement
• Talks are bound to be arduous for both sides. So even though some – not all – EU officials felt compelled to be diplomatic after May’s gesture on clarity, fundamentally nothing has changed.
Hostile Germany in THREAT to UK: We won't tolerate London's dominance post-Brexit says MEP
Last edited by Toby; 24 Jan 17, at 20:38.
I think if you compare what he actually says in the video to what the Express claim he said you'll agree that the Express (as usual) have sensationalised it to provoke an angry reaction among it's readers.
He very calmly said that we can't have euro clearing outside the EU and that we dont seek a punitive deal for Britain. Lets leave aside the threats and have constructive talks.
You can't trust anything in the express, they spin everything to provoke a reaction.
Last edited by zara; 24 Jan 17, at 22:23.
No exodus yet. Let's see what the future brings shall we? After all negotiations with the EU haven't even formally started.
The Banks will only start making long term, strategic investment decisions as and when they get solid info on the shape of the final deal so it's a bit to soon for complacency.
Last edited by Monash; 25 Jan 17, at 00:04.
If the banks are granted equivalence instead of passporting it could go a long way to stemming the flow, but the PM didn't even mention it in her speech.
Last edited by zara; 24 Jan 17, at 23:52.
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