The financial hit to the UK resulting from Brexit may soon be coming in the form of a mass bank exodus. Many citizens have long feared the economic impact of leaving the EU, evidenced by the nearly split voting results of the EU referendum. The 48.1% or 16 million-plus votes cast against leaving the union may have cited the possibility of big businesses leaving the UK. Last week, reports surfaced that several big banks may be departing sooner rather than later.
The latest organization rumored to be pondering an exit is JP Morgan. The U.S. bank is considering moving a large number of staff members to Frankfurt, Luxembourg, and Dublin. It is estimated that up to one thousand jobs could be leaving London ahead of the official exit from the Union. The bank has also been in discussions with German regulators about making the city of Frankfurt its base for European operations. Even more troubling is the additional report that JP Morgan is in talks to purchase a Dublin office to house over one thousand of its employees.
Unfortunately for the UK, JP Morgan is not the only big bank setting its sights elsewhere. Barclays stated that it may add hundreds of staff to offices in Milan, Frankfurt, and Dublin. Deutsche Bank also mentioned the possibility of moving thousands of jobs out of the UK. In addition to those two goliaths, Goldman Sachs has confirmed it will relocate positions outside of the UK as well.
These big banks are uneasy about the possibility of many structures following the exit negotiations. The UK may not be able to secure rights for these companies to operate across EU borders in the coming years. Not finalizing these passporting rights could do significant financial damage to big banks and this appears to be a risk that they are not willing to take.
Ever since the Brexit movement began, other European cities have tried to pry financial services to their neck of the woods. And unfortunately for the UK, these big banks do not seem to be bluffing. Can the UK hold on to its valuable financial organizations throughout the remainder of the Brexit process?