LONDON — US lender Morgan Stanley has become the latest major bank to choose the German city of Frankfurt as its new EU base once the UK leaves the bloc, according to media reports.
Morgan Stanley is expected to apply for a licence with German regulators that will allow it to continue the sale of products and services across the EU regardless of Britain’s exit, with around 200 new jobs being created in the financial centre. That means effectively doubling the number of staff based there.
That represents a doubling of the number of employees based there.
Morgan Stanley has not confirmed the plans, which were first made by the Press Association. Business Insider has contacted Morgan Stanley for comment.
“Come 2019, we might not be able to service [EU] business out of London. To do that we need a European hub, a regulated entity with capital and risk management. We need to establish a second main hub to London in Europe,” a source told the Guardian newspaper.
Financial centres across the EU — including Frankfurt, Paris, Dublin, and Luxembourg — are battling to attract financial services work moving out of London as a result of Brexit as a result of expected legal changes that will make operating in the EU out of London tricky.
Britain is expected to lose financial passporting rights, which allow banks with a base in the UK to sell products and services to customers and financial markets across the EU.
As well as several Japanese lenders, Morgan Stanley’s US counterpart Citigroup is also believed to have chosen Frankfurt for its new base, with Sky News reporting earlier this week that Citi plans to use the German financial centre as “the location for a major new trading operation.”
News of Morgan Stanley’s impending move came on the same day it beat Wall Street estimates for second-quarter earnings.
The bank delivered earnings of $US0.87 a share, up from $US0.75 in the second quarter of 2016 and ahead of the $US0.76 expected by analysts.
“Our second-quarter results demonstrated the resilience of our franchise in a subdued trading environment,” CEO and chairman James Gorman said in a statement.