The City of London fears losing jobs after Brexit, but US banks are planning to retain some positions (Photo: EPA)

The UK’s Financial Times quoted reliable sources as saying that Morgan Stanley, Citigroup, and Bank of America are among the banks planning to use London branches of their EU subsidiaries to smooth the process of building new headquarters on the continent. This is considered the simplest option available, one that offers “less cost, less disruption, and less movement”.

Many US banks are worried that after Brexit, London will no longer be the EU’s financial center and that banks there will not be permitted to offer services to the European market. So they have planned to shift their operations to other European countries. Some US banks have quietly started to do so, but most of them lack the necessary papers.

With “stop gap” Brexit plans, US bank leaders hope to reduce the cost of moving as many as 4,000 jobs out of the UK. However, European regulators may resist moves by banks to keep staff who are handling transactions with EU clients in the UK along with much of the capital associated with the activities.

It is estimated that Brexit could cost up to 75,000 jobs in the UK’s financial services sector. The Bank of England alone expects 10,000 jobs to be immediately lost in the event of a hard Brexit.  

For decades, the UK’s financial sector has made the most of EU membership to become stronger. Banks, fund management companies, and other financial institutions have been able to serve clients anywhere in the 27 EU nations with no need to establish a representative office or branch there. In the wake of Brexit, such advantages will no loger exist.