01 February 2021

Bloomberg: London Bankers Face Location Limbo as ECB Targets Brexit Moves

Young bankers waiting to learn when or whether they might be relocated to the European Union can take some solace from the fact that oftentimes, their bosses also don’t know their own fate.

A senior banker hired to work in London last year was asked just weeks later to pack his bags and move to Europe. Some trading managers at one U.S. bank still don’t know whether they’ll be able to stay in the U.K., while a young trader starting a new job at a European lender this month is waiting to learn just where that job will be.

Despite years of planning for Brexit, global banks and their employers face continuing uncertainty as a threadbare trade deal for financial services and a pandemic keep the world in flux. Meanwhile, regulators are cranking up pressure on banks to execute relocation plans that were set out before Britain left the bloc on Dec. 31.

In the short term, European authorities are granting banks some flexibility as the continent’s latest Covid-19 outbreak slows attempts to move staff to the bloc as agreed, according to more than half a dozen executives and traders involved in the process who asked not to be named. But it is a temporary reprieve.

The European Central Bank is keen to reduce banks’ reliance on the back-to-back model that enables trades processed in Europe to be booked in London, where risk and liquidity -- as well as traders -- ultimately sit. The authority has often said that EU units should be managed locally.

ECB Supervisory Board Chair Andrea Enria said last week banks are engaging but there are “still some sticking points” for ECB Wants More Top Bankers at Lenders’ Post-Brexit European Hubs" class="terminal-news-story" target="_blank">a number of firms after Britain’s departure pushed business such as EU stock trading into the single market. “We have seen significant progress also in the final months of last year, so we’re encouraged that we will get to the target operating model pretty soon.”

More Moves

Beyond the moves that were supposed to take place before Jan. 1, banks including JPMorgan Chase & Co. and Citigroup Inc. are preparing to shift more risk-takers out of Britain by the end of the year to soothe the authorities’ longer-term concerns they’re too remote from the trades they manage, they said. Spokespeople for the banks declined to comment.

At Citigroup, for example, the bank is finalizing its post-Brexit staffing and some senior traders of European assets have little clarity on where their future is going to be, people familiar with the matter said. The firm has recently made several senior appointments to its European markets and securities services unit.

Some bankers expect regulators to require people to migrate in spite of Covid travel restrictions if a bank still has virtually all sales and trading staff working on EU business from home in London. Some regulators have been regularly checking whether banks’ entities on the continent are fully operational and adequately staffed, the people said.....

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