LONDON — Major banks, insurers, and other financial services firms are favouring Dublin ahead of other EU hubs for post-Brexit relocation, a report from professional services giant EY says.
EY’s UK Attractiveness for Financial Services Investors report, released on Monday, shows that of the 222 financial services companies it monitors, 59 have so far made statements about moving some staff or establishing a new entity within the EU after Brexit.
19 have mentioned moving to Dublin, or Ireland more generally, making it the most popular relocation location. Frankfurt is a close second, with 18 mentioning Frankfurt or Germany.
Barclays, the oldest of Britain’s big four high street banks, is among the banks looking to move operations to Dublin. It was reported in January that the bank will set up its post-Brexit EU HQ in the city. JPMorgan has also bought office space there.
The tiny, landlocked state of Luxembourg — known for the number of major corporations that have tax bases there — is third with 11 mentions. Paris, which has lobbied hard to attract banks, was fourth.
“The variety of locations being announced highlights that no one European centre is emerging as a compelling alternative to London,” Omar Ali, EY’s UK Financial Services Leader said, according to a Financial Times report.
The number of banks announcing or discussing plans is expected to rise in coming weeks, especially after comments last week from Sabine Lautenschläger, the vice chair of the Frankfurt-based Single Supervisory Mechanism (SSM) — which oversees the financial stability of euro zone banks.
In an interview with the FT, Lautenschläger effectively told banks to hurry up and decide what they’re going to do.
“My message [to middle-sized banks] would be very clear: speed up. Make up your mind and contact us early so that we can have a discussion about your plans, about the expectations on both sides,” she said.
Hubertus Väth, managing director of Frankfurt Main Finance, told Business Insider the city is “confident” about winning euro clearing business from London post-Brexit.
A deadline set by the Financial Conduct Authority for banks to present their contingency plans is also approaching rapidly, with plans set to be presented by the end of July at the latest.
So far, just a handful of banks and insurers have announced formal plans to move staff and operations away from London as a result of the expected loss of the UK’s financial passporting rights.
Three Japanese lenders, Daiwa, Sumitomo Mitsui Financial Group, and Nomura, have all confirmed in the last couple of weeks that they will set up new post-Brexit bases in Germany’s financial hub, Frankfurt.
Banks are shifting operations ostensibly to deal with the loss of passporting, which is tied to single market membership.
The passport is essentially an agreement that allows banks with a base in the UK to access customers and financial markets in the (currently) 28-nation EU trading bloc. It includes a system of common financial rules that all countries in the passport network sign up to.
It means a US or Japanese bank can set up a subsidiary in London and from there operate branches on the continent. If the UK loses the passport, those branches won’t be tethered to a country in the EU single market and therefore be unable to carry out the range of services they might want to.