Brexit fallout

The Battle to Succeed London

London's financial districts are likely to experience mass departures in the event of Brexit.
  • Why it matters

    Why it matters

    Trillions of dollars worth of transactions are conducted in London. European cities are keen to get a slice of the action if banks abandon the British capital in the case of a Brexit.

  • Facts


    • Some 250 foreign banks have operations in London.
    • The British financial industry and its service providers account for 12 percent of national economic performance.
    • Germany’s financial center is already advertising in a British trade journal with the slogan: “Frankfurt is ready to help.”
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Jamie Dimon, chief executive at JPMorgan Chase, gathered his British employees recently to talk about the upcoming referendum on Great Britain leaving the European Union. “I can’t tell Britons how to vote,” he told them, but then went on to warn of possible consequences.

If Britain were to leave, he said, the company’s London offices could no longer handle customers on the European mainland — and that could impact 1,000, 2,000 or even 4,000 jobs.

“I don’t know how many,” Mr. Dimon said. “But give careful consideration to how you vote.”

The U.S. banking multinational has its global corporate headquarters in London, and the boss wasn’t mincing his words: If Great Britain leaves the European Union, JPMorgan would not continue business in London as usual.

Other big banks have announced similar reactions to a so-called “Brexit,” but none were as direct or ominous.

In case of an E.U. exit, the financial industry in the British capital would shrink while European locations would profit.

But Mr. Dimon’s warning left one question open: If Britain leaves, where on the Continent would he shift parts of his bank’s British business?

Financial centers such as Frankfurt, Dublin and Paris, which have long been in London’s shadow, are now warming up to attract British bankers.

This much is clear: In the case of an E.U. exit, the financial industry in the British capital would shrink while European locations would profit. Certain activities, especially trading transactions, would have to stay in European time zones.

“A shift to Asia or the United States isn’t on the table with regard to a whole series of jobs,” said one high-ranking London banker.

Germany’s financial center is already advertising in a British trade journal with the slogan: “Frankfurt is ready to help.” The city on the Main River is already home to the European Central Bank. Moreover, Deutsche Börse, owner of Germany’s biggest stock market and a heavyweight in handling transactions, has its headquarters there.

Hubertus Väth of Frankfurt Main Finance, an organization that promotes the German financial center, estimates more than 10,000 jobs could move to Frankfurt in the event of Brexit.

“Above all, banks from Switzerland and the United States could transfer divisions here,” said Mr. Väth.

Paris has also started a publicity campaign. After initially proceeding discreetly, the French recently shifted to a higher gear. At a conference on Wednesday, business and governmental organizations from the capital and surrounding region voiced common support for the location.

The economic power of the region is great, Paris boosters argued, and more companies have their headquarters there than in any other European capital. That translates to many large customers for banks and funds, they said.

The message has already reached HSBC, the London-based British banking group. Chief executive Stuart Gulliver announced at the beginning of the year that he intends to shift 1,000 jobs from London to Paris if Great Britain exits the European Union.

According to financial circles, the Irish economic development authorities have their sights set on other British banks. Sources say the Irish have already directly contacted the Royal Bank of Scotland and Standard Chartered about shifting divisions from London. They base their pitch on cheap office space, especially in western parts of the country.

Luxembourg remains more subdued, already being a favorite location for funds. It claims not to be engaged in active marketing.

“Many providers of financial services have a Plan B for a possible Brexit. And frequently Luxembourg stands high on the list of possible new locations,” said Nicolas Mackel, of the industrial association Luxembourg for Finance.

So-called “passport rights” are one big reason why the British financial industry might lose out in a Brexit. They allow that if a bank in a member country has a banking license, it can without any further examination advise on bond issues or sell certificates in other member states. This makes London appealing for U.S. institutions, for example.

London’s rise to a leading financial metropolis was boosted by the “Big Bang” in 1986, when then-British prime minister Margaret Thatcher massively loosened regulation of the financial industry.

Today 2.2 million people work in the British financial industry and its service providers. They account for 12 percent of the country’s economic performance and, according to experts, generate a trade surplus of £72 billion, or about $104 billion. Some 250 foreign banks have operations in London.

A study by PwC, the London-based auditing and professional services firm, found that if the British turn their backs on the European Union, it could cost up to 100,000 jobs and shrink the gross added value of the financial industry by as much as 9.5 percent by 2020.

E.U. critics dismiss this as scaremongering. They point out that previous dire forecasts didn’t come true – for example, that London would suffer if the country didn’t adopt the euro.

But most London bankers believe the loss of passport rights would cause far more pain than sticking with the pound. Only a few hedge-fund managers express contrary opinions. And their motive could also be that they hope for a boost in business through a Brexit – for instance, if the British currency plummets as a result.


Michael Brächer is a financial editor in Handelsblatt’s investment team in Frankfurt. Thomas Hanke is the paper’s correspondent in Paris. Katharina Slodczyk is its London correspondent. To contact the authors:,,

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