Bankers leave London as Brexit outsourcing to EU intensifies

LONDON / PARIS (Reuters) – Investment banks move more rainmakers from London to financial centers across the European Union, accelerating the pace of moves after pandemic and uncertainty over Great Britain’s access Brittany in the bloc slowed down relocations.

FILE PHOTO: The skyscrapers of the City of London’s Financial District are seen from City Hall in London, Britain May 8, 2021. REUTERS / Henry Nicholls / File Photo

Morgan Stanley, Barclays and Goldman Sachs are among those displacing senior bankers, lender sources say, as European regulators push banks to better staff their EU offices and ease travel restrictions. Local hiring has also increased.

The lack of a breakthrough in negotiations for a meaningful Brussels-London financial services deal after Brexit added to the momentum. Bankers in contact with clients in London must have an ‘attendant’ based inside the block whenever they speak to clients, prompting some to relocate to avoid this complication when signing deals.

Lifestyle choices also play their part, with traders and other senior executives on the move as well. Working from home during the pandemic has allowed some bankers to leave London for warmer continental climates, mirroring the move of Wall Street leaders to Miami at the height of the COVID outbreak in New York City.

Some European bankers are now looking to make this change permanent.

“There is Brexit but not only, there is also a post-Covid phenomenon,” said Emmanuel Goldstein, managing director of Morgan Stanley France, explaining that some French bankers were returning home after having spent their entire careers at the foreign.

Morgan Stanley will add 50 people to its Paris office of 150 by the end of 2021 and plans to double in size by 2024 through a mix of outsourcing and local hires as it expands its central Paris hub, Goldstein said.

Barclays’ director of mergers and acquisitions for Europe and the Middle East, Pier Luigi Colizzi, recently moved to Milan and will lead the region’s business team from there, two sources close to the lender said, making him one of the few regional M&A managers based outside. from London.

The bank also bolstered its offices in Paris and Frankfurt with local hires, poaching senior M&A bankers from BNP Paribas and Greenhill & Co.

Alessandro Dusi, head of corporate derivatives and European sovereigns at Goldman Sachs, has moved to Milan, where the overall workforce rose to around 60 from 20 in 2017, a person familiar with the matter told Reuters. In its Madrid office, Goldman now has 60 employees, double the pre-Brexit levels, a second source close to the bank said.

Barclays and Goldman Sachs declined to comment.

Predictions of an exodus of tens of thousands of people from London after the 2016 Brexit referendum have yet to materialize – consultancy firm EY calculates 7,600 Brexit-related financial services jobs had left London until in March, a fraction of the half a million financial staff in London. .

But bankers and analysts say many moves are still underway.

JPMorgan will move around 200 more employees to the EU from London this year, including traders, bringing the total number of relocations since the referendum to around 400, the highest number being in Paris, said a person familiar with the plans.

Financial pressure group Paris Europlace predicted in 2016 that Brexit would create 10,000 new finance jobs in Paris by 2025. To date, less than half of those jobs have materialized, but it remains on target. .

As many as 35,000 financial jobs in London could eventually disappear, said William Wright of think tank New Financial.

European Central Bank banking supervisor Andrea Enria said this month that he understands that the pandemic has slowed relocations and that the ECB’s goal is not “to put people in chains and to move them to Frankfurt ”.

But he stressed that banks need to ensure that the people responsible for European client interactions and risk management are inside the bloc.

“There are banks which have done the ‘full month’ and which are already there and we are fully satisfied and there are banks which have done much less,” he said.

PARIS IN ADVANCE

Expectations that Frankfurt would become the biggest beneficiary of the 7,600 Brexit jobs to date have been mixed, with Paris attracting the most people, according to EY, which estimates that 2,800 jobs have been allocated to Paris. Bank of America, for example, has around 400 employees in the French capital.

Other cities, like Milan, Madrid and Amsterdam, also attract high profile personalities, as banks give employees more leeway in knowing where to work.

The ACPR, the banking supervisory body of the Banque de France, said that in December 2020, 50 British financial firms had obtained an authorization in Paris, representing nearly 2,500 jobs transferred to the French capital, as well as to the minus 170 billion euros in assets. (Graphic: Paris in the lead for Brexit movements,)

“We are seeing an acceleration of jobs in investment banking and trading activities after a slowdown due to COVID,” said Arnaud de Bresson, CEO of Paris Europlace, adding that the bankers had chosen Paris because of its proximity to London, its way of life and its “financial market culture.”

Morgan Stanley’s Goldstein said there was “a new attractiveness” for working in France today, highlighting a more favorable business climate under President Emmanuel Macron.

According to estimates from the city of Frankfurt, it expects 2,000 new Brexit-related jobs to be created by the end of 2022, compared to 1,500 new jobs created in Frankfurt by the end of 2019.

A senior UBS banker said some employees had moved to Italy or the Netherlands rather than Frankfurt for personal reasons, and the city’s bland image and relatively small size didn’t help.

“We need to do more to promote it,” the banker said.

Bankers say they struggled to find enough qualified staff in Frankfurt and that the inexperience of German regulators compared to French supervisors in supervising several large investment banks had frustrated some US banks in particular.

However, the Frankfurt offices are also developing recruitment. Andreas Halin, founder of Global Mind Executive Search Consultants, said senior bankers have realized they “cannot hide behind COVID” and are under pressure from regulation to increase Frankfurt’s workforce.

While Paris is ahead in terms of its workforce, no city has become a single hub for the EU’s capital markets.

Germany is the preferred destination for legal banking entities in the EU, while Paris has won trade-related divisions. Amsterdam gained much of the stock and swap trading from London, as well as trading venues, but few new jobs.

New York has meanwhile become the global winner in derivatives, winning a larger volume of interest rate swaps leaving London than the EU.

Additional reporting by Huw Jones in London and Tom Sims and Patricia Uhlig in Frankfurt; Editing by Rachel Armstrong and Elaine Hardcastle


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