US banks Morgan Stanley and Citigroup have identified many of the roles that will need to be moved from Britain following its exit from the European Union, sources involved in the processes told Reuters.
Morgan Stanley, which bases the bulk of its European staff in Britain, will have to move up to 1,000 jobs in sales and trading, risk management, legal and compliance, as well as slimming the back office in favour of locations overseas, according to one source.
Citigroup, which already has a large banking unit in Dublin, will need to shift 100 positions in its sales and trading business, sources with knowledge of the matter said.
Leading financial firms warned for months before last June’s Brexit referendum that they would have to move some jobs if there was a leave vote, and have been working on plans for how they would do so for the past six months.
More details are starting to emerge after Prime Minister Theresa May confirmed Britain would leave the European single market, ending banks’ hopes they might retain “passporting” rights that let them sell their services across the EU out of their London hubs.
HSBC and UBS said on Wednesday they could each move about 1,000 jobs out of London.
A spokesman for Morgan Stanley said no decisions had been taken with regard to its Brexit plans.
“Our focus is on ensuring that we can continue to service our clients whatever the Brexit outcome,” he said. “To that end, we continue to evaluate what changes we may need to make to our business”.
A spokeswoman for Citi declined to comment.
Morgan Stanley currently bases the vast majority of its European staff in Britain, employing around 6,000 people there. It has relied on passporting out of London to service it clients elsewhere in the EU.
In order to continue certain businesses such as trading European securities it will need to shift those operations to a licensed entity in the regional bloc.
The source said that given the bank already had a trading licence in Frankfurt, it was likely to move most of these jobs there despite some of the city’s other drawbacks.
“We don’t like Frankfurt but that’s the only place to go,” the source said. “Culturally, it’s not a vibrant city”.
The source added that US regulators were expected to discourage US banks from moving to countries with a poor country credit rating such as Ireland and Spain.
James Gorman, chairman and chief executive of Morgan Stanley, told analysts this week that Brexit was “a moving chessboard”.
“We like the UK, we like the rule of law in the UK, [and] our aspiration is to keep as much of our business there as possible,” he said.
“But to the extent we have to comply with, obviously, the Brexit rules, we’ll be putting a headquarters somewhere in continental Europe and that will have some implications going forward”.
Investment banking roles, such as merger and acquisition bankers, are expected to be able to stay in London.
Citigroup, which has almost 60 percent of its European headcount based outside Britain, has a relative advantage over most other US banks, given its Ireland banking outpost which is regulated by the European Central Bank.
However, it needs to bulk up sales and trading operations within the bloc and apply for the relevant licences to be able to continue trading with the rest of Europe if passporting rights are lost in a post-Brexit world.
Sources involved in its planning say the bank may have to move 100 or so people in its sales team because of that, though there has not yet been a decision on any location.
“Every business unit is currently discussing where to shift jobs, they won’t all go to one location,” one source said.