BREXIT FALLOUT

Lloyds Seeks Refuge in Berlin

Lloyds Banking Group
Lloyds may want to check out the German flag colors. Source: Picture Alliance

Berlin, known as a haven of hipsters and tech startups, doesn’t usually make it on the short list of cities offering refuge to banks fleeing London as Britain prepares to break with the European Union.

Dublin, Paris and Frankfurt – cities that already host mature financial industries – have been tipped as the most likely destinations for banks interested in shifting operations from Britain to Europe.

Lloyds Bank, however, is breaking with the pack. The British financial institution is considering turning its branch in Berlin into a full-blown European headquarters.

“There are already a few important functions on the ground there that a full-blown subsidiary must have,” a financial-industry, who declined to be named, told Handelsblatt. “The cost that would be necessary to direct the European business from Berlin would be manageable.”

That could be a boon for Berlin. The German capital has been looking to profit from Brexit where it can, but has been focusing more on attracting startups than established financial firms.

If Lloyds follows through with plan, it would become the first major bank to run its European business from the German capital, a silver lining to a troubled story that began during the financial crisis.

The amount of personnel actually transferred from London to Berlin would be limited, sources said.

Lloyd’s was pressured by the British government to purchase the ailing mortgage lender HBOS during the financial crisis, but the acquisition soon proved to be a miscalculation. Lloyd’s ultimately needed a bailout and was partially nationalized.

Through the purchase of HBOS, however, Lloyds also acquired the Royal Bank of Scotland, which has a branch in Berlin with 300 employees. That same Berlin branch now offers Lloyds a potential refuge from the financial industry turmoil in London caused by Brexit.

Lloyds would have to turn the branch into a legally-recognized subsidiary. The amount of personnel actually transferred from London to Berlin would be limited, sources said.

Banks in London are concerned that they could lose so-called passport rights to sell products throughout the European Union in the wake of Brexit.

The Brussels think tank Bruegel estimates that Brexit could cost London 30,000 financial sector jobs and revenues of up to €8 billion. Xavier Rolet, head of the London Stock Exchange, has predicted that more than 200,000 jobs could be transferred from London to the European continent.

We hope you enjoyed this article

Make sure to sign up for our free newsletters too!