With the Brexit vote looming closer, the major Wall Street banks are getting worried and contemplating moving out of London and setting up operations in other European Union (“EU”) countries. Several banks and financial firms have already started making contingency plans.
The recent bank to join the queue is Morgan Stanley MS, which is set to relocate around 1,000 workers from Britain to the continent over the coming years, if the nation votes on Jun 23 to leave the EU. The news was first reported by The Sunday Times.
Morgan Stanley has around 5,000 employees in London along with additional workers in other parts of the U.K., according to a Bloomberg report. Also, it employs over 3,000 workers in European cities of Glasgow, Paris, Zurich and Frankfurt.
With the company planning on contingencies to shift at least a sixth of its U.K. staff gradually in the event of Brexit, the relocation is mostly expected to be in Frankfurt, which is Europe’s top financial hub and a major threat to London.
The EU rules prohibit selling of financial products in the union if the company’s European headquarter is based outside member states. Hence, many big banks with London as the center of their operations in Europe will be forced to move to cities outside the U.K. For continued access to European markets, the big banks will have to relocate thousands of employees and trading operations out of London.
Other major banks such as JPMorgan Chase & Co. JPM, Citigroup Inc. C and The Goldman Sachs Group, Inc. GS have also been issuing similar warnings as Morgan Stanley. These banks cautioned against potential layoffs in U.K. in case of the nation’s exit from the EU.
Earlier this month, JPMorgan’s Chief Executive Jamie Dimon said the exit of U.K. from the EU may result in “fewer JPMorgan jobs in the U.K. and more jobs in Europe.” The company projects elimination of around 4,000 U.K. positions as well as reorganization of its U.K. business following Brexit.
Citigroup, which has about 9,000 workers in the U.K. and around 22,000 employees in the EU, also has a similar contingency plan ahead of the referendum. The company talked about rebalancing operations in event of Brexit in an internal memorandum.
Similarly, Goldman has been vocal about spreading across the EU by retreating tracks from Britain in case of Brexit.
Notably, JPMorgan, Morgan Stanley, Citigroup and Goldman have all donated to the campaign for Britain to remain a part of the EU.
Currently, Morgan Stanley carries a Zacks Rank #3 (Hold).
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