LONDON — Deutsche Bank’s chief regulatory officer has warned that the bank may be forced to move up to 4,000 staff from the UK to Europe as a result of Brexit.
Sylvie Matherat, who joined the German lender in 2015 from the French central bank, said that client demands and pressure from regulators could combine to force almost half of Deutsche’s 9,000 UK staff to relocate to Europe.
“For front office people, if you want to deal with an EU client, you need to be based in the EU. Does it mean I have to move all the front office people to Germany or not? We’re speaking of 2,000 people,” Matherat said in comments reported by Bloomberg News.
“Then you have the local supervisors who rightly say, come on, if you have your client here, if you book your operation here, you need to have your risk management capacity here. It means another 2,000 people.”
With an election win for the Conservatives looming, the City of London’s position as Europe’s financial centre is under threat from a “hard Brexit” that will likely strip the UK of its financial passport.
Theresa May’s government is seeking to end freedom of movement for EU citizens and pull the UK out of the single market. The passport is part of the single market and is a system of common financial rules that allow UK based financial firms to access customers and carry out activities across Europe. The Financial Conduct Authority (FCA) said last year that 5,500 UK companies rely on passporting rights, with a combined revenue of £9 billion.
As a result of the threat to passporting, most major financial firms are looking at establishing or extending European offices to cope with the looming rule changes. Executives from HSBC, UBS, JPMorgan, and Goldman Sachs have all publically suggested that jobs will be moved away from Britain as a result of Brexit.
The Times reported on Thursday that seven banks have signed deals to open offices in Frankfurt, with a further 20 in talks to relocate staff to the German city.
Lenders will have to physically move a large number of staff because of the Single Supervisory Mechanism, the main banking supervisor for the eurozone. It won’t allow “empty shell companies” to skirt around potential post-Brexit trading restrictions on UK-based firms.
Last month, Sabine Lautenschlager, vice-chair of the Frankfurt-based SSM, a unit of the European Central Bank, said applications for European licences will be scrutinised closely.
“It is the ECB that grants licences in the euro area. And to be clear: we will only grant licences to well-capitalised and well-managed banks,” she said.
“We will not accept empty shell companies. Any new entity must have adequate local risk management, sufficient local staff and operational independence.”