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Despite the prime minister’s promise to seek a transitional phase, financial professionals expressed disappointment after Brexit Secretary David Davis estimated that the period would amount to one to two years.
Lenders are saying the government needs to ensure that they have time to adapt amid signs that the process will move quickly. Although the premier used terms like a “phased process of implementation” to avoid a “cliff edge,” Brexit Secretary David Davis estimated that the period would amount to one to two years.
On top of the two years the government will use to negotiate its break from the EU, the industry will need at least three more years of access to the EU in its current form to adapt to what comes next, one bank executive said. An industry lobbyist suggested it might need as long as five years.
Worst Case
The U.K. leader indicated this week that she’ll pull Britain out of the European Union’s single market, prompting banks including JPMorgan Chase & Co. and HSBC Holdings Plc to begin detailing their strategies to shift thousands of jobs out of the country to ensure continued access to the bloc.
“Talking about transitions and phase-ins will be important,” Barclays Plc Chief Executive Officer Jes Staley told Bloomberg Television on Thursday from the World Economic Forum in Davos, Switzerland.
A lack of clarity on the government’s part could force banks to assume the worst and begin enacting their contingency plans early and perhaps switch over more activities than they might do with more insight. Bankers are also concerned that discussions between the U.K. and EU on a transitional phase will come late in the divorce process.
The finance industry needs time to make adjustments including finding offices abroad, shifting capital, moving or hiring staff, seeking regulator approvals in new locations and ensuring existing financial contracts remain legal.
By talking of an “implementation” period, the government may just be aiming for enough time for firms to make technical legal changes rather than overhaul their businesses, Bank of America Merrill Lynch economist Robert Wood told clients in a report this week. [...]
Morgan Stanley may move as many as 1,000 jobs in sales and trading, risk management, legal and compliance, as well as back-office positions, Reuters reported Friday, citing an unidentified source. Citigroup Inc. could move about 100 positions, according to the report.
“We continue to evaluate what changes we may need to make to our business, and no decisions have yet been made in this regard,” Mark Lake, a Morgan Stanley spokesman, said in an e-mailed statement. Citigroup’s Danielle Romero-Apsilos declined to comment. [...]