German finance group claims large scale movement of operations and jobs out of London before Brexit kicks in.
London is set to lose up to 800 billion euros ($909 billion) of assets by March next year, according to lobby group Frankfurt Main Finance (FMF). The loss will be brought about by banks moving their business operations to other hubs before Brexit takes place, says a report published by CNBC.
The figure realesed by Frankfurt Main Finance recently has been calculated based on the fact that 30 financial institutions have applied to the European Central Bank to move their headquarters out of London to Frankfurt. The lobby group report claimed that this number would be go up by March and continue to increase thereafter even beyond Brexit.
According to the report, the 800 billion euros being moved out of London relates to balance sheet assets such as cash, inventory and prepaid expenses. CNBC reports that the reason for companies moving those assets to Frankfurt is so that new offices could meet minimum operational and regulatory requirements.
The FMF report quotes Managing Director Hubertus Vath as saying that uncertainty was behind the banks’ decision to relocate selected business divisions or entire businesses out of the UK. "As long as uncertainty persists, most institutions are likely to prefer the minimum solution. In any case, it is clear that considerable second-round effects will follow," CNBC quoted Vath as saying.
According to media reports, various large banks in London have expressed their desire to shift jobs out of London before Brexit . According FMF’s estimates, up to 10,000 jobs would be moved out of London to Frankfurt before Brexit kicks in. It also expects job relocations to continue until 2024.
However, some banks have not announced plans to shift staff from London to those locations, and in fact have opened or expanded existing European offices. Several other banks are working on massive overhauls of their European operations.
CNBC reports that various groups representing London and its financial sector have said that the industry getting ready for the worst-case scenario but as yet there was no large scale impact of corporate relocations. There are also no visible fears of substantial job losses as yet.
However, companies are closely watching the developments on Brexit, as more jobs moving to the continent after Brexit would depend on the result.