Banks divided over London exodus after Brexit
As Britain voted to leave the EU, the future of its financial services industry is now uncertain. Some analysts say financiers won’t flee the country, but others are preparing for exodus.
#Brexit results just in. pic.twitter.com/45KJdXB7gT
— Pedro da Costa (@pdacosta) June 24, 2016
"There will be no mass exit of banks and financial institutions from the Square Mile," Mark Boleat, policy chairman for the City of London Corporation, told Reuters.
"The general view of the City is that the government should push for the UK to retain our access to the single market," Boleat added.
READ MORE: Global stocks plunge as UK votes for Brexit, Cameron to resign
Morgan Stanley was reported to have started a process to relocate 2,000 key investment banking staff from London to either Dublin or Frankfurt. The bank has denied the information.
JPMorgan CEO Jamie Dimon said the bank would have no choice but to overhaul its UK business model, which employs 16,000 people.
JP Morgan slashes its U.K. GDP forecast following Brexit vote in #EUrefpic.twitter.com/F7C6KZOeAZ
— Georgi Kantchev (@georgikantchev) June 24, 2016
US banks have told their employees to focus on clients rather than speculate on Brexit.
"I've convened a big team meeting at 0800 GMT as the juniors are freaking out. I will tell them to focus on their job and wait for the volatility to pass, but the reality is much, much starker, we'll have a crash and big layoffs," a senior investment banker at a US bank told Reuters.
JP Morgan CEO Jamie Dimon said Friday the bank may have to relocate between 1,000 and 4,000 employees as a consequence of #Brexit. #EUref
— Ryan Heath (@PoliticoRyan) June 24, 2016
Many investors are likely to lose, James Butterfill, head of research and investments at ETF Securities, told Bloomberg.
“It’s scary, and I’ve never seen anything like it. We’re going to see outflows from basically any kind of cyclical asset. A lot of people were caught out, and many investors will lose a lot of money,” he said.
While some investors will be scared by Britain's exit from the EU, others will be attracted by the devalued pound, which plummeted to a 31-year low soon after the vote, according to Colin McLean, Managing Director at SVM Asset Management.
"Certainly, some international investors could find the UK less attractive, but history shows us others are positively attracted to economies that get a devaluation boost,” he added.
