Goldman Sachs is speaking to several different European cities as part of its Brexit contingency planning.
Goldman Sachs CEO Lloyd Blankfein told the BBC in an interview that the investment bank has looked at increasing office space in a number of European cities, such as Frankfurt in Germany and Dublin in the Republic of Ireland. But he said the giant investment bank is not looking to relocate London staff just yet.
“We don’t have big plans now, we are looking — we are trying to avoid,” Blankfein said when asked about whether the bank is going to start relocating jobs before the UK leaves the EU on March 29, 2019.
However, he did say that a transition deal — a period of adjustment to let companies get ready for the new rules — is vital for Brexit to work. Otherwise, he says, Goldman Sachs, as well as others, would have to act “prematurely” by relocating jobs, business units, and activities.
“We are talking about the long-term stability of huge economies with hundreds of millions of people and livelihoods at stake and huge gross domestic product. So, if it takes a little while — I’d rather get it right than do things quickly,” Blankfein said.
So, if it takes a little while – I’d rather get it right than do things quickly
Goldman Sachs employs 6,500 people in Britain. Blankfein told the BBC he hopes he does not have to enact contingency plans but it all depends on the outcome of the Brexit deal.
The loss of financial passporting rights
The loss of passporting rights seems almost a certainty under Prime Minister Theresa May’s “hard Brexit” plan, which involves the loss of membership of the EU’s Single Market in exchange for complete control over immigration.
Passporting rights allow companies to sell goods and services anywhere across Europe using local licences. If the passport is taken away, London could cease to be the most important financial centre in Europe, costing the UK thousands of jobs and billions in revenue. Around 5,500 firms registered in the UK rely on the European Union’s passporting rights for the financial services sector, and they turn over about £9 billion in revenue.
This is one of the biggest fears in the City. It has led to global investment banks, such as Citigroup and HSBC, signalling that jobs could move to continental Europe from London.
This week, JPMorgan’s head of investment banking Daniel Pinto said the Wall Street giant is relocating hundreds of bankers in London to Dublin, Frankfurt, and Luxembourg because of Brexit.
And if you cannot benefit from access to the EU from the UK… then the risk is there will be some adjustment that will cause some people to have a smaller footprint in the UK
In March, Lloyd’s of London — the city’s 329-year-old insurance market — said it would open a subsidiary in the heart of the European Union to counter Brexit effects.
Blankfein said London’s financial sector could contract as a result of Brexit.
“Obviously, a lot of people elect to have their European business concentrated in a single place, and the easiest place, certainly, for the biggest economy in the world [America] to concentrate would be the UK — the culture, the language, the special relationship, and we are an example of that,” said Blankfein to the BBC.
“The UK has a big history — certainly in financial services — of managing markets and having a fair system that makes it very attractive, but it extends to other industries as well.
“And if you cannot benefit from access to the EU from the UK — and nobody knows what those rules and determinations will be — then the risk is there will be some adjustment that will cause some people to have a smaller footprint in the UK.”
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