Banks counting the cost of Brexit have moved or plan to move more than £900 billion in assets to the European Union – the equivalent of ten per cent of the entire UK banking system.
Figures compiled by think-tank New Financial reveal the extent of the changes wrought upon the City by Britain’s departure from the EU.
More than 440 firms in banking and financial services have relocated part of their business, moved employees or set up new entities on the continent following Brexit.
While banks have moved – or intend to move – more than £900bn in assets, insurance firms and asset managers have transferred over £100bn.
Dublin is the most popular destination for a quarter of firms, with 19 per cent choosing Paris – including Goldman Sachs, BNP Paribas and HSBC.
JP Morgan warned last week that it may be forced to consider moving its UK operations to Europe as a result of Brexit. The bank’s EMEA headquarters is in London – and it has sites in Bournemouth, Glasgow and Edinburgh.
New Financial identified 7,400 staff moves or local hires since the referendum in 2016; the think-tank expects that figure to increase in the coming years.
“The worse news is that this analysis is almost certainly a significant underestimate of the real picture: many firms have slipped below our radar,” William Wright, managing director of New Financial said.
“Given the limited equivalence deals in place, over time we expect there to be a drip-feed of business and activity from the UK to the EU.”
Britain’s lucrative financial services industry has been mostly cut off from the EU – it’s biggest customer – since the transition period ended on 31 December. The sector is not covered by Boris Johnson’s newly-negotiated UK-EU trade deal.
Meanwhile the European Commission has warned that the Northern Ireland Protocol in the Brexit divorce settlement remains the only way to prevent the return of a hard border with the Republic.
Late-night talks between the commission vice-president Maros Sefcovic and Brexit minister Lord Frost aimed at resolving differences over the implementation of the protocol broke up without an agreement.
In a statement, a UK government spokesman said that while there had been “some positive momentum”, a number of “difficult issues” remain to be resolved. Both sides agreed there should be further “intensified contacts” in the coming weeks.
The protocol has been blamed as a factor behind a recent upsurge in violence in loyalist areas amid concerns in those communities that it potentially weakens their place in the United Kingdom.
Under its terms – designed to prevent the return of a hard border – Northern Ireland remains in the EU single market for goods, meaning that products coming from the rest of the UK are subject to border controls.
Unionist politicians have been calling for it to be scrapped, but in a statement following the meeting, the commission insisted that it was the only way to maintain an open border with Ireland in line with the Good Friday peace agreement.
“The vice-president reiterated the EU’s commitment to the protocol, which is the only way to protect the Good Friday (Belfast) Agreement and to preserve peace and stability, while avoiding a hard border on the island of Ireland and maintaining the integrity of the EU single market,” it said.
“Only joint solutions, agreed in the joint bodies established by the Withdrawal Agreement, can provide the stability and predictability that is needed in Northern Ireland.”
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