From Law.com
VTB Bank has become the first major financial institution to announce that it will relocate its European headquarters from London due to the U.K.’s decision to leave the EU.
The Russian state-owned lender currently employs several hundred people in London and runs some global functions from the U.K. capital, including anti-money laundering and compliance. But VTB deputy chair and CFO Herbert Moos told the Financial Times that the bank is now looking at moving its main regional operations to one of its existing offices in Frankfurt, Paris or Vienna, with the company’s board due to make a decision on the new location by the end of the year. “We did have bigger plans for the London office, but after Brexit we are scaling them down and building them up elsewhere,” he said.
Goldman Sachs is also preparing to shift almost 2,000 staff out of London if the U.K. loses access to Europe’s single market, according to The Sunday Times, although the bank has since denied that it has made a decision on its response to Brexit.
U.K. prime minister Theresa May recently indicated that controlling immigration and withdrawing from the jurisdiction of the European Court of Justice would take precedent over maintaining access to the single market in Britain’s Brexit negotiations. There are fears that this could result in banks and other companies—including global law firms—shifting business away from London to other European cities. JP Morgan Chase and Morgan Stanley recently confirmed that they are reviewing their staffing arrangements in the region.
A recent report [PDF] by management consulting firm Oliver Wyman claims that a so-called “hard Brexit,” in which the U.K. is no longer a part of Europe’s single market, could cost the country’s financial services industry 38 billion pounds ($47 billion) in annual revenue and result in the loss of 75,000 jobs. The study was commissioned by finance industry lobbying group TheCityUK.
Other European countries are now positioning themselves in an attempt to attract any business that leaves London following the Brexit vote. France has introduced significant tax breaks for expatriates and simplified the process of registering financial companies, while Germany is considering changing its labor laws in order to help the country win business from the United Kingdom.
Speaking at the annual meeting of the International Institute of Finance in Washington this weekend, Morgan Stanley chief executive James Gorman said that banks would be more likely to relocate business from London to New York, rather than elsewhere in the Eurozone, however. “I think the big winner is going to be New York,” he said.
