AFTER BREXIT

Long Goodbye for London Bankers

A pedestrian looks at a mobile device as he crosses a raised walkway at the Canary Wharf financial, shopping and business district in London, U.K., on Tuesday, June 21, 2016. Financial and related services accounted for 11.8 percent of U.K. economic output, or 190 billion pounds ($278 billion), in 2014, and quitting the EU could cost as many as 100,000 jobs in the sector by 2020, according to industry group TheCityUK. Photographer: Simon Dawson/Bloomberg
Some of these Canary Wharf bankers may be moving if the ECB gets its way.
  • Why it matters

    Why it matters

    The fact that euro clearing could be handled in London, despite Britain never joining the euro, is one of the reasons the British capital has been so attractive to foreign banks. That could change with Brexit.

  • Facts

    Facts

    • In the world of finance, clearing refers to turning a promise of payment into actually moving money from one bank to another.
    • The European Central Bank wanted large transactions involving securities denominated in euros to be handled in the euro zone instead of London. But the highest E.U. court ruled against that in early 2015.
    • Experts say clearing houses have some 700 employees themselves. There are more than 1,000 clearing jobs at London banks.
  • Audio

    Audio

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It was one of London’s biggest European court victories. Last year, the British capital dodged a bullet when the European Court of Justice stopped banks from having to transfer jobs to the euro zone for a vital part of their business.

The judges ruled that large transactions in euro-denominated securities didn’t have to be handled within the euro zone, as the European Central Bank has demanded, even though Britain has never joined the 18-nation currency bloc.

Under the ruling, so-called “euro clearing” — an extremely important market for Europe’s financial capital — was allowed to remain in London.

The ruling’s logic was simple: Being a member of the European Union was enough for London to keep its place as a European financial capital. The ECB was overstepping its authority by forcing a shift.

With Brexit, all bets are off.

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