Jobs will leave Canary Wharf and the City unless the financial sector can be assured of access to EU markets, a bank chief has said.
James Bardrick, UK boss of Canary Wharf-based Citi, told a Conservative Party conference fringe meeting that banks would set up across the channel to operate freely in the remaining 27 EU nations. This inevitably meant a reduced presence in London if London could not trade freely.
Prime Minister Theresa May is beginning to outline her vision for Brexit – and she is looking to take an increasingly hardline, with the likelihood that Britain would be denied special arrangements to keep so-called “passporting”.
Sterling fell to a three-year low against the euro on Monday (October 3) as the City responded to news that a firm date had been fixed for triggering Article 50. In March next year the two-year process of extricating the country begins.
Pool of talent
At a fringe event in Birmingham, Mr Bardrick said the banks would leave with reluctance, such is the pool of talent in the capital, but the ability to operate in key markets would be paramount.
He said: “If the rules allow them, in the new relationship, to continue operating, many would be very pleased to do that.
“It is unlikely that you would see such a high concentration in the UK to serve the whole of a region when the UK is not part of that economic region, not least because the EU countries will want to encourage and will take action to try and make people do that.
“In our case, there are significant costs of us changing and fragmenting the way we do business, it’s quite efficient as it is.”
Mr Bardrick acknowledged that the trade-offs – including freedom of movement – were difficult, and Mrs May has indicated that “controlling the borders” is one of the key planks of “Brexit means Brexit”.
Difficulty of service
Mr Bardrick said: “The ideal, narrow analysis would be, we can guarantee good provision of uninterrupted service if we retain passports.
“But if the deal that is needed to do to retain passports is contrary to the effective will of the people around some of the other freedoms, then we all recognise the difficulty of that. But that’s not for us to decide.”
“If there are movements away from that and you don’t have full access to the single market then there are things that you just cannot do from London under EU rules which would remain in the other EU 27 countries.
“That would mean that people would have to move people and roles and responsibilities and some infrastructure across the Channel.
“We are very well distributed, more than half of our people at Citi already work outside the UK. That isn’t typical.
“But for a lot of people who are highly concentrated they would have to reduce.”
Some politicians and financiers are seeking some kind of exception to the rules because of the importance of the financial sector to the UK economy. Former minister Dominic Raab said the UK should develop “an equivalence regime” as maintenance of the City institutions was key to the UK and Europe.
He said: “Don’t get me wrong, these issues need to be handled very carefully, but I don’t see a cliff edge for the City.”