LONDON — Clients of HSBC, Europe’s biggest bank, have started requesting that their money is routed through the bank’s offices in mainland Europe, avoiding the UK as a consequence of Brexit-related uncertainty, one of the bank’s most senior UK staff has said.
Speaking in an interview with Bloomberg, HSBC’s Head of Global Commercial Banking Noel Quinn said that a “small number” of clients want certain trades routed through the bank’s Paris office instead of its London headquarters.
“A small number of our larger clients are asking us to book more of their trade and foreign-exchange activity in their French operation through our Paris office than their UK divisions,” Quinn told Bloomberg.
Firms are doing this, Quinn said, because “they can’t afford to wait for a decision that may not emerge until two years’ time.”
HSBC clients are “making plans to ensure they can continue to trade irrespective of the outcome,” he added.
Since Britain voted to leave the EU last June, the future shape of the UK’s financial services sector has been up in the air, largely thanks to uncertainty about the retention of Britain’s financial passport.
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.
For example, 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.
As it is so inextricably tied to the European Single Market, Britain leaving the single market virtually guarantees the loss of the passport. This has forced banks to consider their operating positions in the UK, with many planning to move staff from London to other bases in Europe.
UBS, JPMorgan, Goldman Sachs, and HSBC itself are among the banks who have made clear their willingness to shift bankers out of the UK, with HSBC’s CEO Stuart Gulliver saying around 1,000 bankers in HSBC’s investment banking and markets divisions would “probably need, in our case, to go to France,” once Brexit talks begin.
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