Goldman Sachs said that it may have to “restructure” parts of its UK business as a result of the country decision to leave the European Union in June.
In a regulatory filing released in Goldman’s native USA on Thursday, the bank said that the Brexit decision could “adversely affect” certain aspects of its operations in the UK and the European Union, and as a result it may have to reconsider how some of these businesses are structured.
A Q-10 regulatory filing — a form of quarterly report mandated by the US Securities and Exchange Commission — from Goldman includes this extract about the referendum (emphasis ours):
“In June 2016, a referendum was passed for the United Kingdom to exit the European Union (Brexit). The exit of the United Kingdom from the European Union will likely change the arrangements by which U.K. firms are able to provide services in the European Union which may adversely affect the manner in which we operate certain of our businesses in the European Union and could require us to restructure certain of our operations. The timing and the outcome of the negotiations between the United Kingdom and the European Union in connection with Brexit are both highly uncertain. Such uncertainty has resulted in, and may continue to result in, market volatility and negatively impact the confidence of investors and clients.”
Goldman’s admission that it may have to think about changing the way it does business in Britain following the vote makes it the latest in a series of banks and major businesses to suggest they could do so.
Goldman has already admitted it could move staff away from the UK and into other EU countries in the coming months as a result of Brexit. “Every outcome is possible,” Richard Gnodde, the co-head of the Investment Banking Division of Goldman Sachs said at The Times’ CEO Summit in July.
In July, Business Insider’s Matt Turner published this handy chart to show just what banks may do in terms of UK staff. As well as this, M&G Investments, the fund arm of insurer Prudential, is looking at expanding its operations in Dublin, according to Reuters.
Vodafone has also said it could move thousands of jobs out of the UK. While it is a telecoms firm and not a bank, this threat is a clear indicator of the diminishing attractiveness of the UK as a place to do business.
Perhaps the most worrying sign for the UK’s banking sector was a leaked Deutsche Bank document obtained by Business Insider’s Ben Moshinsky, which argued that London is likely to lose its financial services passport, and that investment banks that shift operations abroad quickly will benefit from a “first-mover advantage.”
Barclays and Bank of America Merrill Lynch could shift their markets businesses to Dublin, while Goldman Sachs has subsidiaries in Paris and Frankfurt, Germany, that it could use to keep its access to the 27-member single market once the UK officially leaves the European Union, according to the note. JPMorgan could shift resources to Luxembourg, where it has a subsidiary.